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In what is being termed a ‘merger of equals’ and one that is set to create the world's largest advertising firm estimated to be worth more than $ 30 billion, Omnicom Group Inc and Publicis Groupe SA have decided to team-up.
The new entity will be called Publicis Omnicom Group and be jointly led by Omnicom CEO John Wren and Publicis CEO Maurice Levy as Co-Chief Executives. The merged entity will be based in The Netherlands.
Conflicting business interests in India notwithstanding, the two advertising, marketing and digital majors have joined forces to focus on the fast growing Asian and Latin American markets, where both the companies have ramped up operations considerably in the last couple of years.
Nakul Chopra, CEO, Publicis, South Asia, told Business Line that it was too early to deliberate on any changes in the India operations.
In India, the Publicis Omnicom Group would include advertising heavyweights such as Publicis India, BBH India, Saatchi & Saatchi, Leo Burnett, StarcomMediaVest, Zenith Optimedia, DDB Mudra, TBWA, RK Swamy BBDO, among others.
Managing partner of BBH India, Subhash Kamath, told Business Line that the announcement of the merger would help jettison the business in the country, “though it is early days as yet”.
Conflicts of interest could arise, since the Publicis Groupe handles Coca-Cola, while Omnicom handles Pepsi. In the fast moving consumer goods (FMCG) space too, Publicis works on some Procter & Gamble FMCG brands, while Omnicom handles a part of Unilever's FMCG portfolio.
The transaction is termed the biggest in the advertising world. Last July, Japan's Dentsu agreed to take over Aegis Group for about $ 4.9 billion.
CONSOLIDATION SPREE
All three advertising giants - Publicis Groupe of France, New York-based Omnicom Group and London-based WPP, led by Martin Sorrell, have grown through consolidation, even as they compete aggressively with each other in the India market.
Incidentally, Publicis in India has been ramping up operations and had recently hired Bobby Pawar from JWT, of the Ford Figo advertising scandal, to oversee the entire group’s creative product line. Partha Sinha, formerly with BBH India, had also been roped in to oversee strategic planning.
With the global advertising industry showing signs of a mild recovery, the merger is touted as proving more clout to the companies to negotiate the changing ad rates in print, television and on the internet.
With combined 2012 revenue of $ 22.7 billion, the merged group of more than 130,000 employees is set to serve clients’ evolving needs and help them build their brands and grow their businesses in the rapidly changing communications landscape, the company’s said in a joint statement.
The merger has been approved by the board of directors of both the companies. The company expects to close the deal in the fourth quarter of 2013 or the first quarter of 2014.
Based on the closing prices on July 26, 2013, Publicis Omnicom Group will have a combined equity market capitalisation of approximately $ 35.1 billion.
amritanair.ghaswalla@thehindu.co.in
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