Reuters logo
UPDATE 1-Publicis, Omnicom to announce merger soon-source
July 27, 2013 / 7:55 PM / 4 years ago

UPDATE 1-Publicis, Omnicom to announce merger soon-source

* Deal to be presented as merger of equals - source

* Publicis to hold news conference at 1200 GMT on Sunday

By Leila Abboud and Paritosh Bansal

PARIS/NEW YORK, July 27 (Reuters) - French advertising group Publicis will soon announce a plan to combine with larger rival Omnicom in a deal that will be presented as a merger of equals and could include shared management, a person familiar with the situation said.

Publicis said on Saturday that it plans to make a “major corporate announcement” on Sunday at a media briefing at 1200 GMT at its Paris headquarters, without giving further details.

If Publicis and Omnicom merge, the world’s second- and third-largest ad groups would overtake current leader WPP . The new powerhouse would have a market capitalisation of around $30 billion and annual sales of around $23 billion.

It would bring together Publicis brands such as Saatchi & Saatchi and Leo Burnett with Omnicom’s BBDO Worldwide and DDB Worldwide.

The deal would not be without risks as it would likely face scrutiny from antitrust regulators because of the power the new company would wield in the ad buying world by spending roughly a combined $100 billion a year, or 20 percent of the global media business.

And major customers could balk at the agencies having conflicts if they also work for competing firms.

The deal, first reported by Bloomberg on Friday, would reshape the competitive dynamics of the advertising industry at a time when the rise of Internet marketing is leading to rapid changes in how big companies hawk products and hone their image.

To cope, the big five ad agencies have spent billions of dollars in recent years to expand in emerging markets from Brazil to China and scoop up digital marketing companies.

Omnicom had a market capitalisation of $16.8 billion at the close of trading on Friday, while Publicis was valued at 12.5 billion euros ($16.6 billion).

Omnicom is also larger in revenue terms, posting $14.22 billion in sales last year against $8.76 billion for Publicis.

Publicis was founded in 1926 by Marcel Bleustein in Paris after he left his job as a salesman at his family’s furniture shop, with the company moving to the Champs Elysees 20 years later.

A successful deal with Omnicom would be a crowning achievement for Publicis Chief Executive Maurice Levy and Elisabeth Badinter, the daughter of Publicis’ founder. Badinter is the group’s largest shareholder with a 9.1 percent stake and also serves as board chairman.

Levy has turned Publicis into a global force during his 26 year tenure largely through savvy deal-making and a prescient push into Internet and digital marketing.

The group had an operating margin of 16.1 percent last year. North America accounted for almost half of revenue, and 37 percent of sales came from digital marketing.

Founded in 1986, Omnicom generated just over half of its revenue in its domestic market last year.

Publicis spokeswoman Peggy Nahmany did not return requests for comment on Saturday. Omnicom was not immediately available for comment.

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below