'ALMOST AS A JOKE'
It all began when Levy casually mentioned the idea of a merger to Omnicom CEO John Wren at a social event in New York about six months ago. "I said it almost as a joke, but then once we each went back and reflected, it didn't seem so crazy," Levy said at a press conference at Publicis headquarters.
The two executives later brought in Rothschild Group to advise Publicis and Moelis & Company for Omnicom, choosing independent firms instead of larger banks in part to try to prevent leaks.
But when thorny issues cropped up in the talks, Wren and Levy settled things in one-to-one phone calls, the two men said. In the last 10 days leading up to the deal bankers, lawyers and principals were basically in lockdown hammering out details, a source familiar with the matter said.
The new company - Publicis Omnicom - will be traded in New York and Paris. It will overtake WPP and have combined sales of nearly $23 billion and 130,000 employees. It brings together Publicis brands such as Saatchi & Saatchi and Leo Burnett with Omnicom's BBDO Worldwide and DDB Worldwide.
The French and U.S. company said shareholders in Publicis and Omnicom would each hold about 50 percent of the new company's equity. Wren and Levy will jointly lead the new company for the first 30 months, then Levy will become non-executive chairman and Wren CEO.
The two veteran CEOs even chose the neutral territory of the Netherlands for the new holding company.
Yet questions remain whether the equal nature of the marriage will stand the test of time. Pierre Ferragu, analyst at Sanford C. Bernstein Research, said it could take a few years to see if the cultures of Publicis and Omnicom would blend together or if fissures appear in the so-called merger of equals.
"There are mechanisms in place in the first few years to protect the parity of management so it should be fine in the transition period. But in these kinds of mergers, there are always tensions. Usually one side or the other eventually imposes its way of doing things on the other."
The new group will also have to get antitrust clearance from authorities in around 45 countries. "We've looked at the antitrust issues very carefully and are not expecting anything that would prevent us from going forward," said Wren.
Morningstar analyst Corty said it was unlikely the two companies would