In a joint statement Thursday evening, the companies said they "have terminated their proposed merger of equals by mutual agreement, in view of difficulties in completing the transaction within a reasonable timeframe."Neither company will pay a termination fee, which was set at $500M in the merger agreement.
Omnicom CEO John Wren said in a conference call May 9 that management issues and a tax environment in the European Union that has become "politically" charged were key to the decision.
The two conglomerates were "unable to reach decisions on management and other key issues despite our best efforts," he said, adding the "complexities and risks" of the combine outweighed the benefits of a merger.
Levy was more blunt, telling Reuters that Omnicom wanted too much leverage at the top of the combined entity. "Omnicom wanted their people to fill the CEO, CFO and general counsel jobs," he said. "I thought that went too far. I was not ready to cede on this point."
Originally expected to be sealed in six months, the merger push entered its ninth month in May with signs of trouble building since April. Levy, releasing his company's first quarter earnings on April 17, admitted that "progress is slower than anticipated" but insisted the deal was moving forward with a third quarter expected close. But reports of trouble focused on tax issues and plans for upper management under a combined Omnicom-Publicis, where Wren and Levy would have served as co-CEOs for two and a half years before Wren took the reins.
"The challenges that still remained to be overcome, in addition to the slow pace of progress, created a level of uncertainty detrimental to the interests of both groups and their employees, clients and shareholders," Publicis CEO Maurice Levy and Omnicom CEO John Wren said in a joint statement on May 8. "We have thus jointly decided to proceed along our independent paths," they said, adding: "We, of course, remain competitors, but maintain a great respect for one another."The deal, announced in July 2013, would have created the top advertising, PR and marketing conglomerate, surpassing WPP Group.
Wren, who stressed Omnicom has not lost clients because of the merger attempt, added in the conference call that management differences were corporate, not cultural. "But I know now that we had underestimated the depth of these differences," he said.
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