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'POG' merger 'best result' for WPP

Friday, April 25, 2014 - 02:24

April 25 - WPP pips expectations with a strong rise in revenues. And chief exec Martin Sorell tells Reuters that a ''struggling'' union of rivals Omnicom and Publicis would be good for his company. David Pollard reports.

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It's the company behind the agencies that produce some of the world's biggest ad campaigns. Like many global firms, WPP has had to fight to keep business alive in recent years. It appears to be paying off. Strong trading in North America and Britain helped them to a bumper seven percent rise in first quarter revenue growth. That, and - it's claimed - new clients defecting from WPP's heavyweight rivals, Publicis and Omnicom. Or ''POG'', in the words of WPP boss Martin Sorrell. SOUNDBITE, SIR MARTIN SORRELL, CEO, WPP, SAYING (English): ''What we've seen in the last three weeks is one and half billion dollars of business flow, actually from POG as we call it, to WPP.'' Publicis boss, Maurice Levy, and his Omnicom counterpart, John Wren, announced plans for a 35 billion dollar merger last July. That union could be in jeopardy, according to a latest, exclusive report from Reuters. It says tax authorities have ''unexpectedly'' failed so far to approve plans for a joint company to be tax resident in the UK, but registered in the Netherlands. That's against a backdrop of a stiffer anti-tax avoidance agenda across G20 nations. Sorrell says he's hearing similar. SOUNDBITE, SIR MARTIN SORRELL, CEO, WPP, SAYING (English): ''Most of the people I talk to say there is a third to a fifty percent probability that the deal will not go through. Whether the, from a, from a humility point of view, either CEO could take that or not is another question. I think probably the best result for us is that we have two companies struggling to merge over the next three years as they put their strategies in place or try to.'' One sour note in WPP's latest outlook: geopolitical risk. Sorrell says there's much of it on the horizon - not least of all on the fringe of Europe. SOUNDBITE, SIR MARTIN SORRELL, CEO, WPP, SAYING (English): ''Russia has slowed. I am worried about Ukraine and the impact of Russian sanctions. Those will be ratcheted up ... And that's not good news. And as I say, come back to the geopolitical risk, it heightens it.'' And one other negative in the statement: a strong British currency - which, WPP says, has led to foreign exchange taking a sizeable eight percent hit.

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'POG' merger 'best result' for WPP

Friday, April 25, 2014 - 02:24