Earlier this month, Omnicom and Publicis revealed that they were walking away from their proposed $35 billion “merger of equals” that they had originally announced to great fan-fare last summer as they claimed that greater scale would allow them to better face a changing media landscape and the likes of Google. The news of the cancelled deal (which was a “cancellation of equals” if you will in that neither will pay the $500M breakup fee) was a major story in the worlds of finance and media, as the combination would have toppled WPP as the world’s largest advertising agency holding company.
However, this result did not come as a complete surprise, given that the deal had faced an onslaught of regulatory hurdles and that the companies’ most recent earnings calls did little to reassure investors, with one analyst saying the two CEOs were “not singing from the same song book.” Indeed, it was ultimately a lack of agreement and consensus at the highest levels that proved a bridge too far for this transatlantic deal to cross.
Some of the aforementioned regulatory hurdles were certainly posing problems, with anti-trust clearance in China and tax approvals in Europe being two of major government blessings that had yet to be secured. There were also technical elements that were proving sticking points, such as which firm would be the acquirer from an accounting standpoint.
The real stumbling block here though came on a human level. The two CEOs, Omincom’s John Wren and Publicis’ Marcus Levy (who were slated to share power for the first 30 months with Wren taking the reins thereafter) could not agree on who would fill key roles, such as those of CFO and General Counsel. Both wanted their respective firms’ executives in those positions, and Levy feeling that Omnicom was in fact, if not in name, taking over Publicis – an outcome he felt obligated to prevent.