Omnicom To Merge With Publicis To Form World's Biggest Ad Agency

(RTTNews) - Advertising companies Omnicom Group Inc. (OMC) and Publicis Groupe SA (PUBGY.PK, PGPEF.PK) Sunday said that they have agreed to merge to create the world's biggest ad agency worth $35.1 billion or 26.5 billion euros.

The companies have termed the all-stock transaction as a "merger of equals". The merged company will be called Publicis Omnicom Group, and would have market capitalization of $35.1 billion and generate annual sales of $22.7 billion. It would become the world's largest advertising company, toppling the current market leader WPP plc. (WPP.L, WPPGY.PK).

The transaction has been structured in a way that the shareholders of Publicis Groupe and Omnicom will each hold about 50 percent of the new entity. Publicis Chief Executive Maurice Levy and Omnicom CEO John Wren will serve as co-CEOs of the new company for a period of 30 months, following which Levy will become non-executive chairman and Wren will continue as CEO.

The deal is expected to close in the fourth quarter of 2013 or the first quarter of 2014, subject to shareholder and other regulatory approvals.

Publicis Omnicom Group is expected to be listed on the NYSE and Euronext Paris under the symbol OMC. It will also be included in the S&P 500 and CAC 40. Publicis Omnicom Group will be based in the Netherlands, while its operational head offices will continue to be in Paris and New York.

Publicis Groupe shareholders will receive one newly issued ordinary share of the new company for each Publicis share held with a special dividend of 1.00 euro per share. Omnicom shareholders will get 0.813 newly issued ordinary with a special dividend of $2.00 per share along with up to two regular quarterly dividends of $0.40 per share.

"John and I have conceived this merger to benefit our clients by bringing together the most comprehensive offering of analog and digital services." Levy said.

New York-based Omnicom's ad agencies include BBDO worldwide, DDB Worldwide and TWBA Worldwide, and media buyer OMD. Publicis owns brands such as Leo Burnett and Saatchi & Saatchi in addition to media-buying company Starcom Mediavest.

Meanwhile, the deal might face scrutiny from antitrust regulators as the combination of the two companies would dominate the ad-buying world. The merged company would spend about a combined $100 billion a year, representing about 20 percent of the global media business.

A merged company may also face account conflicts, as the two advertising agencies work for competing companies.

OMC closed Friday's trading at $65.11, up $0.81 or 1.26% on the NYSE. In the after-hours trade, the stock is up $2.04 or 3.13%.

PUBGY.PK closed Friday's trading at $19.77, up $0.18 or 0.92%.