Omnicom and Publicis have agreed to merge in a deal to create the largest global advertising, marketing and PR conglomerate with annual revenues topping $20B.
The deal would put Publicis' global PR giant MSLGroup under the same roof as OMC's global PR units like FleishmanHillard, Porter Novelli and Ketchum, among others.
Subcommittees are being formed to hash out the integration of various disciplines, including PR, within Publicis and Omnicom.
|Levy, Wren in Paris July 28.
The merged company has been dubbed Publicis Omnicom Group and will carry a market cap topping $35B with 130K employees.
John Wren, CEO of New York-based Omnicom, and Maurice Levy, who leads Paris-based Publicis, will head the combined holding company as co-CEOs over the next 30 months, after which Wren will take the sole reins as Levy slides into a non-executive chairman's role.
Levy noted the rise of new media giants like Google and Facebook, as well as reliance on Big Data have forced dramatic changes in the communication and marketing landscape.
"John [Wren] and I have conceived this merger to benefit our clients by bringing together the most comprehensive offering of analog and digital services," he said.
The Financial Times noted the three largest challenges of the merger will be antitrust review, client conflicts, and culture clash.
Forty-five countries will review the merger. The new holding company will own three of the world's five largest media agencies. On the conflict front, agencies of the combined company will rep Coca-Cola, PepsiCo, Nissan, Toyota, Google and Microsoft, among others.
Omnicom Publicis will have a 16-member board, including Wren, Levy and seven non-executive directors from each company.
The deal is expected to close by the fourth quarter of 2013 or first quarter of 2014.
Regulators in dozens of countries must sign off on the merger, in addition to shareholders of both companies.
Ketchum (OMC) and Kekst and Company (Publicis) are assisting their respective holding companies with communications on the deal, which sees the two holding companies leapfrog WPP as the largest of the lot.
"You have to applaud the French for a brilliantly engineered deal," WPP chief Martin Sorrell said in an interview with Bloomberg TV. Sorrell deflected a question about WPP buying Interpublic by noting that the OMC-PUBL merger gives the industry a sense of "equilibrium" where the large holding companies can focus on organic growth.
MDC Partners CEO Miles Nadal applauded the deal on Twitter and in interviews, while Havas chief David Jones was more critical. "Clients today want us to be fast, more agile, more nimble & entrepreneurial, not bigger & more bureaucratic & more complex," he wrote on Twitter.
Added Interpublic CEO Michael Roth: "There's nothing about scale that makes for better creative ideas, or leads to better integration of marketing disciplines."
Asked about client conflicts after the deal, Wren and Levy said competing interests are commonplace in the industry today.
"If you look at the industry has changed quite dramatically in the last 15 years and all the holding companies as they are today already handling a lot of conflict," said Levy. "If you look at any of our competitors, as small as it can be, you will see that they are handling conflicts because this is the story of our life.”