Merged Publicis-Omnicom may speak with American accent

Mon Jul 29, 2013 1:43pm EDT
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By Christian Plumb and Leila Abboud

PARIS (Reuters) - The advertising giant to be formed from the merger of Publicis (PUBP.PA: Quote) and Omnicom (OMC.N: Quote) may resolve any clash between its French and U.S. arms by taking on a more American identity, some industry observers said on Monday.

The two companies have portrayed the deal that will create a $35 billion industry leader as a "merger of equals". They have similar market capitalizations and the new group's board will be equally split between representatives of Publicis and Omnicom.

However, the merged company will be led by an American CEO after a 30 month transition and overseen from a headquarters on neutral ground in the Netherlands - far from the Paris home of Publicis near the Arc de Triomphe. Maurice Levy, the veteran CEO of Publicis whose French-accented English is a reminder of the agency's roots, will take the less visible role of non-executive chairman.

"It's a step the French company has taken because they've crossed the bridge of realizing they don't need or want to be French anymore," said one senior Paris-based banker. "From an organizational standpoint and a markets standpoint it's going to be an American-based company."

A second banker dismissed the notion of a merger of equals, saying the fact that Omnicom would end up in the driver's seat could be positive.

"American companies tend to be pretty comfortable being in charge from the get-go - and that's certainly the case here," he said. "At the end of two years the sole CEO will be American. The main listing will be in New York. The holding company will be in the Netherlands. It's not hard to figure out what's going on," said the banker.

Clarity on control could help the company avoid the fate of high profile mergers such as the Daimler-Chrysler deal of the late 1990s. This suffered from cultural clashes and a lack of overlap in the cars they sold until it was unraveled.

Similarly, the merged telecoms equipment group Alcatel-Lucent ALUA.PA bleeds cash while video games maker Activision Blizzard (ATVI.O: Quote) is buying itself out of its merger with the games arm of Vivendi (VIV.PA: Quote) in an $8 billion deal.   Continued...

Omnicom Chief Executive John Wren (L) and Publicis Group Chairman and CEO Maurice Levy smile after announcing an agreement on their merger on the floor of the New York Stock Exchange in New York July 29, 2013. REUTERS/Shannon Stapleton