Sorrell: A Publicis-Omnicom 'merger of equals' is 'impossible'

Martin Sorrell, CEO of WPP, has described attempts by rival holding companies Omnicom Group and Publicis Groupe to form a "merger of equals" as "impossible."

Martin Sorrell, CEO of WPP, has described attempts by rival holding companies Omnicom Group and Publicis Groupe to form a "merger of equals" as "impossible."

The chief executive concedes the multi-market move to create the world's biggest marketing group is likely to be ratified, eventually, but said talk of it being "a merger of equals" is simply untrue.

"They talk about this being a merger of equals, which is technically impossible," he said. "From an accounting point of view, there has to be one company that takes over the other."

The commonly held belief that Publicis’ merger with Omnicom will be completed by the third quarter or even the fourth quarter is also increasingly unlikely, Sorrell said.

He stressed that the Publicis-Omnicom merger, led by CEOs Maurice Lévy and John Wren, respectively, still has "big hurdles to jump," and suggested the process could go well into 2015.

"It is apparent in the last few weeks that there are significant structural issues [Wren and Lévy] have to face in terms of the residence of their companies, the tax position of their companies, and their ability to buy back stock," he warned.

Sorrell added that the deal is also likely to be delayed by significant concerns by Chinese regulators about what will happen to the domestic advertising industry and the influence of foreign owners on Chinese content.

Holding companies are the new full-service agencies
However, he said the significance of the role of the marketing holding company, a conglomerate of individual agencies, was increasingly important today.

While the defining traits of individual agencies – "the agency brands" – are important to the people who work in them, they are "no longer as important as they used to be to clients," Sorrell contended.

Noting last week’s media wins for VodafoneMarks & Spencer and Comparethemarket.com, he added that "[client accounts are] increasingly becoming integrated. No agency brand has been able to scale the breadth of what you have to do. So the groups, whether WPP or the putative POG or IPG or Dentsu Aegis, they are the full-service agencies of the 21st century."

Speaking at Newswork's Shift event, the 69-year-old leader went on to say that "integration," particularly talent integration, is the challenge for WPP’s "new" age of "horizontality."

"When you say 'build the brand," you have this dichotomy," he said. "You want strong brands, you want the best people running those brands, but at the same time, you want them to work together. And the real problem is that good people are more difficult to manage than average people. Because good people are successful, and are opinionated as a result, and [it’s] therefore difficult to get them to understand that they should listen."

This story originally appeared on the website of MediaWeek.

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