Omnicom Group and Publicis Groupe announced on July 28, 2013 that they have signed a definitive agreement for a merger of equals, creating the world’s leading company in communications, advertising, marketing and digital services, with combined 2012 revenue of USD 22.7 billion. Based on closing prices on July 26, 2013, Publicis Omnicom Group will have a combined equity market capitalization of approximately USD 35.1 billion. The merged group houses 130,000 employees.
The new structure
Publicis Omnicom Group has been structured with balanced corporate governance consistent with the spirit of a merger of equals. Publicis Groupe and Omnicom’s CEOs will lead the company as co-CEOs through an initial integration and development period of 30 months, following which Mr. Lévy will become non-executive Chairman and Mr. Wren will continue as CEO. The company will have a single-tier board with 16 members, consisting of the two co-CEOs and seven non-executive directors from each company.
Maurice Lévy, Chairman and CEO of Publicis Groupe said, “The communication and marketing landscape has undergone dramatic changes in recent years including the exponential development of new media giants, the explosion of Big Data, blurring of the roles of all players and profound changes in consumer behaviour. This evolution has created both great challenges and tremendous opportunities for clients. John and I have conceived this merger to benefit our clients by bringing together the most comprehensive offering of analogue and digital services. Equally important, it will offer our talented people new avenues for growth and success at the crossroads of strategic intelligence, creativity, science and technology.”
John Wren, CEO of Omnicom said, “Both Maurice and I believe this new company reflects our vision of retaining the best talent, attracting an incredible roster of clients and leading innovation. Omnicom and Publicis Groupe are reshaping the industry by setting a new standard for supporting clients with integrated messaging across marketing disciplines and geographies. This combination will enable us to leverage the skills of our exceptionally talented people, our broad product offering, enhanced global footprint, and tremendous roster of global and local clients. In short, we believe this is a merger that will set our new company on a path to accelerated growth, with long-term benefits for clients, employees and shareholders.”
For the first year following the closing of the transaction, Bruce Crawford, currently Omnicom Chairman, will be the non-executive Chairman of Publicis Omnicom Group. He will be succeeded by the current Publicis Groupe Chairperson, Elisabeth Badinter, as non-executive Chairperson for the second year following the closing of the transaction.
The combination, which has been unanimously approved by the Boards of Directors of both companies, brings together an extensive portfolio of agencies including BBDO, Saatchi & Saatchi, DDB, Leo Burnett, TBWA, Razorfish, Publicis Worldwide, Fleishman-Hillard, DigitasLBi, Ketchum, StarcomMediaVest, OMD, BBH, Interbrand, MSLGROUP, RAPP, Publicis Healthcare Communications Group (PHCG), Proximity, Rosetta, CDM, ZenithOptimedia and Goodby, Silverstein & Partners, to name just a few.
Value for shareholders
The transaction is expected to create significant value for shareholders. The new company’s broader portfolio of agencies and services and deeper geographic footprint will allow the combined company to accelerate revenue growth and create operating synergies. The future scalability and internal synergies of the combined company are expected to generate efficiencies of USD 500 million.
The transaction is a cross-border merger of equals under a holding company, Publicis Omnicom Group, in The Netherlands. The Group’s operational head offices will continue to be based in Paris and New York. The merger is expected to be tax-free to the shareholders of both companies. The transaction has been structured so that the shareholders of Publicis Groupe and Omnicom, after special dividends, will each hold approximately 50 per cent of the equity of Publicis Omnicom Group.
Publicis Groupe shareholders will receive one newly issued ordinary share of Publicis Omnicom Group for each Publicis Groupe share they own, together with a special dividend of €1.00 per share. Omnicom shareholders will receive 0.813 newly issued ordinary shares of Publicis Omnicom Group for each Omnicom share they own, together with a special dividend of USD 2.00 per share. In addition, Omnicom shareholders will receive up to two regular quarterly dividends of USD 0.40 per share if declared and the record date occurs prior to closing.
Ms Badinter and family members as well as Mr Lévy have entered into agreements in support of the merger, as have Mr Wren, Mr Crawford, and Mr Randall Weisenburger, Omnicom’s CFO.
Publicis Omnicom Group is expected to be listed on the NYSE and Euronext Paris, traded under the symbol OMC, and to be included in the S&P 500 and CAC 40.
The transaction is subject to approval by the shareholders of both companies as well as numerous regulatory approvals. It is expected to close in the fourth quarter of 2013 or the first quarter of 2014.
Publicis Groupe and Omnicom have expressed the desire to have their shares start trading simultaneously on the day of announcement. As a consequence and because of the time difference, Publicis Groupe has asked Euronext Paris to postpone the trading of its shares to 9.30 am New York time / 3.30pm Paris time.
Moelis & Company is financial advisor to Omnicom on the transaction. Rothschild is acting as financial advisor to Publicis Groupe. Legal advisors to Omnicom are Latham & Watkins LLP and De Brauw Blackstone Westbroek N.V. Legal advisors to Publicis Groupe are Wachtell, Lipton, Rosen & Katz; Darrois Villey Maillot Brochier; and NautaDulith N.V. Jones Day provided counsel to Moelis & Company.