NEW YORK: Publicis Groupe and Omnicom Group have decided to call off what would have been the biggest deal in marketing history, a $35 billion combination that would have made the merged Publicis-Omnicom Group the largest holding company in the world.
The holding companies said in a joint statement Thursday night that they called off the merger "by mutual agreement, in view of difficulties in completing the transaction within a reasonable timeframe." The firms released each other from all termination fees, so neither will have to pay the $500 million penalty written into the contract, according to the statement.
"The challenges that still remained to be overcome, along with the slow pace of progress, created a level of uncertainty detrimental to the interests of both groups and their employees, clients, and shareholders," CEOs Maurice Levy of Publicis and John Wren of Omnicom said in the statement. "We have thus jointly decided to proceed along our independent paths. We, of course, remain competitors, but retain a great deal of respect for one another."
The collapse of the deal, which would have created a marketing umbrella group to surpass WPP as the world’s largest, was reported Thursday evening by The Financial Times, The Wall Street Journal, and The New York Times, all citing sources close to the situation. The Times reported that the boards of both companies approved the decision on Thursday afternoon.
Martin Sorrell, CEO of WPP, said via email that the merger's collapse was a case of "eyes bigger than tummy."
The combined holding company was set to include a stable of PR firms such as FleishmanHillard, Ketchum, and Porter Novelli from the Omnicom side and the MSLGroup network from Publicis, among others.
The deal - billed as a "merger of equals" - was announced late last July, complete with champagne toasts near the Arc de Triomphe in Paris. However, in the months that followed, its scheduled completion date was pushed back numerous times amid reported conflicts about top executive positions, hurdles moving its tax base to the UK, and regulatory concerns in China and other countries.
Although executives from both holding companies sought to reassure stakeholders about the merger’s chances in recent weeks, analysts began to doubt that the combination would ever take place. Last week, an analyst from Albert Fried put the deal’s chance of success at 40%, noting that recent client losses at Publicis firms made the deal less attractive to Omnicom.
This story was updated on May 8 at 8:55 pm with comment from Omnicom and Publicis. It was later updated with quotes from WPP chief Martin Sorrell.