The largest proposed merger in Adland has been cancelled. Publicis Groupe and Omnicom today said that they have terminated their estimated $35 billion merger by mutual agreement, "in view of difficulties in completing the transaction within a reasonable timeframe."
The two companies said they have released each other from all obligations with respect to the proposed transaction, and no termination fees will be payable by either party. Under certain conditions, a $500 million termination fee could have been imposed if just one party called the deal off.
The decision was unanimously approved by the Management Board and the Supervisory Board of Publicis Groupe and the
Board of Directors of Omnicom.
The deal -- which had been looking less and less likely in recent weeks -- was formally terminated by Publicis Groupe and Omnicom late Thursday, well after the close of the U.S. and European stock exchanges. Omnicom is holding a conference with analysts and press tomorrow to discuss the breakup.
The companies had proposed merging last July, but a variety of regulatory hurdles and disagreements between the two companies ranging from how to organize to who would be appointed to certain executive posts proved too much to overcome. For example both companies wanted their respective chief financial officers to take on the CFO post of the new company. There was also an unresolved debate about how to organize media and digtial operations and who would run them.
Wall Street Journal reported earlier that the companies continued to argue over which would be the acquiring company. Despite the positioning by the firms that the deal was a "merger of equals,"
technically one company had to acquire the other.
Regulatory hurdles included obtaining certain tax concessions from France and receiving approval from the UK for exclusive tax residency in that country. China still had not approved the deal -- or least the companies have not acknowledged receiving approval if they did. There were also law suits filed by Omnicom shareholders attempting to kill the deal. Those shareholders argued that they were not being fairly compensated under the terms of the agreement, given Omnicom's larger revenue and profit contributions to the merged entity. Now, those suits would appear to be moot.
In a joint statement, Maurice Levy,
chairman and chief executive officer of Publicis Groupe, and John Wren, president and chief executive officer of Omnicom Group, stated: "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. We have thus
jointly decided to proceed along our independent paths. We, of course, remain competitors, but maintain a great respect for one another."
In a separate statement, Levy said: "The decision to discontinue the process was neither pleasant nor an easy one to make, but it was a necessary one. Prolonging the situation could have led to the diversion of the Group's management from its principle function: to best serve our clients. Our paths diverge today with mutual respect. Publicis Groupe will continue to pursue and accelerate the implementation of its ambitious strategic plan for 2018. I am very confident in our ability to successfully see this through and to achieve all our goals.”