As egos and regulatory regimes clashed, the deal between advertising giants Omnicom Group Inc. (NYSE:OMC) and Publicis Groupe S.A. (ADR) (OTCMKTS:PUBGY) (EPA:PUB) fell by the wayside.

Omnicom

Omnicom – Publicis: Merger of equals but one firm always rules

The $35 billion merger couldn’t be completed due to “”difficulties in completing the transaction within a reasonable time frame.”  In other words, no one was willing to compromise on key control issues and the legal meter was running, might be one interpretation.

Using typical M&A doublespeak, the merger had been labeled a “merger of equals,” which is absurd.  There is typically a legal advantage given to one side or another in such mergers, otherwise management would be a disaster.  That is particularly the case when two companies have very different management outlooks.

“We still have a lot of complex time-consuming issues that because of different corporate cultures we haven’t been able to resolve,” Omnicom Group Inc. (NYSE:OMC) CEO John Wren said in an interview in the Wall Street Journal. “There was no finish line in sight and that created uncertainty.”

“Dead end situation”

“For several weeks now, we realized that we were in a dead-end situation and that the best thing would be to turn back and focus again on our own plans,” Publicis Groupe S.A. (ADR) (OTCMKTS:PUBGY) (EPA:PUB) Chief Executive Maurice Levy was quoted in the Journal as saying.

The two companies were known to have very different management styles.  France-based Publicis preferred a centralized model of control while US-based Omnicom preferred a more “devolved” model.

These core differences in philosophical beliefs should have been a warning flag from the start, because the clash of core beliefs was just the start.  Relations between the two sides had severely frayed, the Journal reported, with disagreements stemming from the two CEOs. The primary issue was control.  The two CEOs argued over where the company would be located and which executives would fill top roles. A visible fight had emerged over who would fill the position of finance chief, with both sides digging in.  Omnicom Group Inc. (NYSE:OMC) executives publically said its CFO, Randy Weisenburger, would get the job while Publicis Groupe S.A. (ADR) (OTCMKTS:PUBGY) (EPA:PUB) executives countered its CFO, Jean-Michel Etienne, would fill the post.

Other issues in the doomed merger were cross-Atlantic regulatory concerns, as delays in obtaining regulatory approval, particularly in China, weighed heavily.