• by Joe Mandese  @mp_joemandese, January 2, 2024

Omnicom this morning confirmed it has closed on its $900 million acquisition of Flywheel Digital from Ascential plc, which will operate as a new practice area within Omnicom headed by former Ascential CEO Duncan Painter, who has stepped down from Ascential's board.

The move fulfills Painter's vision to spin off Flywheel as part of a strategic restructuring of Ascential, best known within the ad industry as the operator of the Cannes Lions festival.

"Joining the Omnicom network takes our organization to the next level," Painter states in Omnicom's announcement, adding: "We can scale faster, leverage relationships, and combine data and technology efforts."

His statement noted that the new practice area also brings a new source of commerce data to Omnicom's AI-powered Omni operating system, giving "our clients an unmatched view of complex digital marketplaces and offers them new ways to automate, optimize, and measure their digital commerce and media spend."

Details were not disclosed, but Omnicom executives say access to Flywheel's footprint of digital commerce transactions data was a core rationale for making the deal.

In an as-yet-unexplained related part of the deal, Omnicom agreed to participate in the sale of agency technology startup Hudson MX, which has been financially backed by Ascential under Painter's leadership, and which recently announced a plan to close its sale some time this quarter, and that should it fail, Ascential would be on the hook financially under the terms of an options agreement with another investor, MT II Holdings.

In December, Ascential disclosed that Omnicom had obtained warranty and indemnification insurance protecting it from potential liabilities associated with its purchase of Flywheel, but did not disclose what those liabilities might be.

Flywheel Digital has been the subject of both a two-year federal suit (on appeal in the Fourth Circuit Court of Appeals) and a Maryland state theft of trade secrets suit (stayed pending the federal appeal) by Compass Marketing, which alleges Flywheel executives stole the core foundational digital technology and trade secrets, and other charges.

Compass Chairman-CEO John White previously told MediaPost that the company plans to name Omnicom and Painter as co-defendants following the closure of the Flywheel deal.

Ascential this morning announced two independent non-executive directors -- Joanne Harris and Charles Song -- have also stepped down from its board and that long-time Cannes Lions Chairman and CEO Philip Thomas has been named Executive Director and CEO of Ascential.

Ascential reportedly has been rumored to be considering a sale of the Cannes Lions.