Advertising Giants Announce $35.1 Billion Merger

By TANZINA VEGA and LIZ ALDERMAN
Published: July 28, 2013

Two leading advertising companies, Omnicom Group and Publicis Groupe, announced a merger on Sunday that would create the world’s biggest family of agencies, with a stock market value of $35.1 billion and 130,000 employees.

The combination of Publicis, based in Paris, and Omnicom, based in New York, would supplant the advertising industry leader, WPP of London. Although Omnicom is slightly bigger than Publicis, the deal is shaped as a merger of equals, combining companies that had total revenue of $22.7 billion last year. The new company would be called the Publicis Omnicom Group.
In the early going at least, the combined company would have co-chief executives: John Wren of Omnicom and Maurice Lévy of Publicis. But after 30 months, Mr. Wren, who is 60, would become sole chief executive and Mr. Lévy, 71, would be nonexecutive chairman.
The marriage, if it passes muster with antitrust regulators in the United States and Europe, and is given the blessing of the French government, would bring under one roof separate networks of ad agencies — including BBDO, TBWA and DDB under Omnicom, and Leo Burnett and Saatchi & Saatchi under Publicis. Collectively, the conglomerates represent some of the world’s largest brands, including AT&T, Visa and Pepsi at Omnicom and McDonald’s, Coca-Cola and Walmart at Publicis.
Mr. Lévy and Mr. Wren opened a heavily attended news conference by signing the deal under a bright Parisian sun on the roof of the Publicis headquarters on the Champs-Élysées, with the Arc de Triomphe looming in the background. “Voilà!” Mr. Lévy exclaimed with the flourish of his pen.
Shareholders of each company will hold 50 percent of the equity in the new company, which will be listed on the New York Stock Exchange, Euronext Paris and included in the Standard & Poor’s 500-stock index and the CAC 40 in Paris. A single board of directors will include Mr. Wren and Mr. Lévy and seven representatives from each of the two merging companies.
In a statement Mr. Lévy cited technological advancements in advertising and the rise of so-called Big Data — the ability to amass larger volumes of consumer information and make money from it in various ways — as reasons for the merger.
“The communication and marketing landscape has undergone dramatic changes in recent years including the exponential development of new media giants, the explosion of Big Data, blurring of the roles of all players and profound changes in consumer behavior,” he said. “This evolution has created both great challenges and tremendous opportunities for clients. John and I have conceived this merger to benefit our clients by bringing together the most comprehensive offering of analog and digital services.”
At the news conference, he expanded on that notion. The “billions of people” who are now online and providing data to companies,” Mr. Lévy said, provide an opportunity to use advertising technologies to “crunch billions of data in order to come with a message which is relevant to a very narrow audience.”
Mr. Wren also stressed the importance of digital technology to advertising’s future. “Everything three years from now is going to be digital,” Mr. Wren said. “Everything that we do, even billboards nowadays are digital or become digital.”
Omnicom, which analysts say has so far focused more on expanding its digital operations organically as opposed to through acquisitions, stands to benefit from the media buying power of the Starcom MediaVest Group, a division of Publicis that is one of the largest media agencies in the world. In April, Starcom signed a multiyear deal with Twitter to combine some of the resources that they both use for measuring and tracking data and advertising. That deal was estimated to be hundreds of millions of dollars.
Last year, revenue at Publicis increased nearly 14 percent to $8.8 billion, while revenue at Omnicom increased 2.5 percent to $14.2 billion.

http://www.nytimes.com/2013/07/29/business/media/advertising-giants-announce-35-1-billion-merger.html?hp&_r=0