The megadeal would have brought three Minneapolis agencies under one parent.
NEW YORK – Omnicom Group Inc. and Publicis Groupe SA abandoned their $35 billion plan to create the world’s largest advertising company, saying they couldn’t overcome obstacles that slowed progress toward the deal’s completion.
The delays created uncertainty for shareholders, employees and customers, the companies said Thursday in a statement. Both companies’ boards voted unanimously to end the deal, with no termination fees.
“The decision to discontinue the process was neither pleasant nor an easy one to make, but it was a necessary one,” Publicis Chairman and Chief Executive Maurice Levy said in a statement. “Prolonging the situation could have led to the diversion of the group’s management from its principal function: to best serve our clients.”
The deal would have brought three Minneapolis agencies under one corporate umbrella: Fallon, Martin Williams and BBDO Proximity. Martin Williams and BBDO Proximity fall under the Omnicom umbrella; Fallon is part of Publicis.
No immediate impact had been expected at the local agencies, however.
The all-stock deal, billed as a merger of equals, would have created a company with $23 billion in revenue and more financial resources to invest in new advertising technology. Ownership was to be split down the middle for the two sets of shareholders, and the chief executive officers would have jointly run the combined entity, they said when the transaction was announced in July.
Those plans bogged down when the boards couldn’t agree on key management roles or on integration from top to bottom, according to a person with knowledge of the matter who asked not to be identified discussing private deliberations.
“The root cause was almost certainly managerial and organizational matters rather than taxes or antitrust issues,” Brian Wieser, an analyst at Pivotal Research Group in New York, said in a research note. “The affair has been fascinating, if less so for shareholders who might have presumed that the endeavor was pursued under clearer terms.”
Paris-based Publicis, the third-largest advertising firm, owns Saatchi & Saatchi and Leo Burnett, and offered digital assets including Digitas and Razorfish, as well as strength in emerging markets. Omnicom, based in New York, ranks second and is strongest in the U.S., with agencies including BBDO and TBWA.