Publicis Groupe SA (EPA:PUB) (OTCMKTS:PUBGY) and Omnicom Group Inc. (NYSE:OMC) announced their failure to reach an agreement and decided to terminate their proposed merger of equals agreement.
According to a joint statement from the advertising giants, the decision was unanimously approved by the management and supervisory board of Publicis and the board of directors of Omnicom.
Publicis Groupe- Omnicom merger: Challenges created uncertainty
The advertising firms explained that they mutually agreed to abandon the planned merger and released each other from all obligations because of difficulties in completing the transaction within a reasonable time frame. No termination fee will be paid by either party.
“The challenges that still remained to be overcome, in addition to the slow pace of progress, created a level of uncertainty detrimental to the interests of both groups and their employees, clients and shareholders,” said Maurice Lévy, chairman and CEO of Publicis Groupe SA (EPA:PUB) (OTCMKTS:PUBGY) and John Wren, president and CEO of Omnicom Group Inc. (NYSE:OMC)in their joint statement.
The chief executives added, “We have thus jointly decided to proceed along our independent paths. We, of course, remain competitors, but maintain a great respect for one another.”
Conflicting cultures, complex deal structure
Some experts in the advertising industry opined that the proposed merger of equals between Publicis Groupe SA (EPA:PUB) and Omnicom Group Inc. (NYSE:OMC) was impossible to complete since the first day because of several factors including conflicting personalities and cultures, as well as a very complex deal structure that caused the delays.
Wren said yesterday, “We thought we would be through this in six months, and nine months later we still have a lot of complex time-consuming issues that, because of different corporate cultures, we haven’t been able to resolve.”
Publicis Groupe SA (EPA:PUB) (OTCMKTS:PUBGY) and Omnicom Group Inc. (NYSE:OMC) announced their planned merger in July last year. The transaction whould have created the world’s largest advertising company worth $35 billion, with the ability to strongly compete with Google Inc (NASDAQ:GOOG) (NASDAQ:GOOGL) who has dominated the industry over the past several years as advertisers and marketers shifted their focus to digital media.
Last January, the European Commission approved the proposed merger of the advertising giants without conditions. The deal also received clearances from other governments including Australia, Brazil, Canada, Colombia, India, Japan, Mexico, Russia, South Africa, South Korea, Turkey, Ukraine as well as the expiration of the Hart-Scott-Rodino Antitrust Improvements Act (HSR) review period in the United-States.