New York-based Omnicom Group and Paris-based Publicis Groupe are in “late-stage” merger talks, according to a report by Bloomberg published Friday evening.
The agency holding companies are two of the four largest companies in Adland, the other two being WPP and Interpublic Group.
A rep at Omnicom declined to comment on the Bloomberg report and Publicis couldn’t be reached for comment. Bloomberg attributed the rumored merger talks to an unnamed source.
There was skepticism in the analyst community that the merger would take place.
In an investor note issued late Friday Brian Wieser, senior analyst with Pivotal Research Group stated that “our view is that such a transaction is unlikely to occur.” He cited anti-trust issues in the U.S., where the combined entity would control nearly 40% of the advertising industry. That’s twice as much as the nearest competitor, WPP, would control, Wieser said.
The merger would also face an uphill battle getting approved in France, Wieser surmised, “a country famously known for protecting national champions,” of which Publicis Groupe is undoubtedly considered one.
That said, Weiser added, “such a combination has significant industrial logic to it, and thus shouldn't be ruled out as plausible. Consolidation would be favorable for profit margins at the holding companies individually and collectively, if only because it may contribute to a reduced degree of competition when services are priced for clients.”
Publicis has been the subject of merger rumors for years. Last August for example, the Financial Times blog Alphaville reported that talks were ongoing between Publicis Groupe and Interpublic Group. A few days later, Publicis Groupe issued a statement declaring that the report was wrong and that there were no ongoing merger talks. The FT then quickly retracted the story.