Publicis Groupe SA (OTCMKTS:PUBGY) and Omnicom Groupe Inc. (NYSE:OMC), two of the biggest advertising companies in the world, announced on Sunday in Paris that they will merge, creating the largest advertising group in the world, with a market value of over $30 billion.
The new group will have offices both in Paris and New York and the merger will be completed at the end of the fourth quarter of 2013 or first quarter of 2014, the French group Publicis announced.
The shareholders of each of the two companies will own approximately 50% of the new entity, to be called Publicis Omnicom Group. The current heads of Publicis, Maurice Levy and Omnicom, John Wren, will be co-chief executives.
The companies together have a combined stock market value of over $30 billion and revenues of $23 billion last year.
The business alliance will bring under one roof agencies such as BBDO Worldwide (owned by Omnicom) with Leo Burnett and Saatchi & Saatchi (both owned by Publicis), increasing their presence in all major markets. The deal will ensure to the new group more weight in negotiating better rates for customers in terms of TV advertising, internet and print, at a time when the global industry is showing signs of recovery.
Publicis brings to the new group a substantial portfolio of assets in the digital sector, including Digitas, Razorfish and LBi International and agencies in emerging markets, while the strength of Omnicom’s is its strong presence in the U.S.
The merger will probably attract the attention of regulators in Europe and the U.S., given the group’s big market share and common areas of activity.
Some networks owned by Omnicom are BBDO Worldwide, TBWA Worldwide and DDB Worldwide Communications Group. Publicis Publicis Worldwide owns the Leo Burnett Worldwide and DigitasLBi networks.
Coca-Cola and PepsiCo, the largest producers of soft drinks in the world, will be two of the most popular competitors that will become customers of the new advertising group resulting from the merger.
Pepsi launched the offensive against Coke in the ’70s, when the Pepsi Challenge advertising campaign provided consumers with samples of both drinks. The list of the most important Coca-Cola advertising campaigns include “Coke is it!” and “Always Coca-Cola.” Spokesmen for PepsiCo and Coca-Cola were not willing to comment.
Global advertising spending is expected to grow by 5 percent next year, to $43.9 billion, according to market research firm ZenithOptimedia, which belongs to Publicis.
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