It started in February of last year when John Wren visited Publicis Groupe and admired the company’s stunning Champs Élysées view. Maurice Lévy, CEO of the French agency giant, was quick to say that it could belong to the Omnicom chief. That “joke,” as Lévy later called it, led to a proposal to combine advertising’s second- and third-largest players to create a $24 billion colossus to unseat leader WPP, creating unprecedented industry scale.
Nine months and nearly $100 million in professional fees later, no one’s laughing at the punch line now delivered by two of the industry’s top executives, who killed their history-making merger Thursday.
It’s not just about losing face after a highly publicized effort to reshape the advertising landscape. The ease with which the two are walking away from the deal begs the question of the very rationale supporting its initial concept. Both parties now call the transaction an “opportunity,” not a “necessity.” Nonetheless, during the process each side revealed a weakness in praising the other’s strength: for Omnicom, it was Publicis’ digital resources and for Publicis, Omnicom’s creative assets. Officially, the complexities in attaining U.K. tax domicile and regulatory approvals, and subsequent transaction closing delays, are blamed for the deal’s collapse. But insiders insist the lack of consensus about management structure and top personnel decisions are the real reason, something even Omnicom’s Wren hints at.
“The corporate [and] cultural differences are not easily resolved,” Wren told Adweek. “It’s better to call it off now than get married and have regrets.”
Erstwhile groom Wren last week sounded relaxed and ready to move forward. On the other hand, Lévy’s regret was on display in a CNBC interview where he said ending things was “an issue of principle” since Omnicom did not respect the terms of the original agreement and it would be “impossible to get equality.” (While the dissolution was agreed to by both sides, it was Publicis’ lawyers who initiated it, sources noted.)
All along, a big sticking point was the choice of CFO, with Omnicom’s Randy Weisenburger believed to be the lead candidate over his Publicis counterpart. But more recently, Lévy had become reluctant to give up the nonexecutive chairmanship—as agreed upon—when time came for Wren to assume it after serving as CEO following transitional co-CEO management, said sources.
It didn’t take long for WPP chief Martin Sorrell to dance on the grave: “This [merger] was born out of emotion and ego to knock WPP off its perch, given our lead in areas like fast-growth markets, digital and data. Maurice’s well-known Gallic charm seduced John with ‘All this could be yours,’ but Maurice wouldn’t give up power after the announcement. It all added up to a soap opera.”
If so, it’s one of the most expensive soaps ever made. “Costs and disruption to personnel have been very real, with client and investor relationships likely impacted on the margins,” said Brian Wieser, senior analyst at Pivotal Research. “This was especially true for Omnicom, as the industry’s most stable holding company abruptly changed positioning with respect to its need for scale. Meanwhile, Publicis has faced an extreme bout of misfortune in client losses of late. No moves have been pinned directly on the merger, but uncertainty over the past month could not have helped.”
Wren, however, said he’s not wasting time second-guessing the decision made after that winter’s day in Paris. “I can’t regret anything up to this moment. All I can do is do better moving forward. I felt I was doing what was in the best interests of Omnicom’s clients, employees and shareholders,” he said.