US and French ad agencies merge to form world's largest

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US and French ad agencies merge to form world's largest

US and French ad agencies merge to form world's largest
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Two of the world’s largest advertising agencies, France-based Publicis Group and New York-based Omnicom, have announced a merger.

It will make them the world’s biggest advertising group, worth 26.4 billion euros. Publicis and Omnicom shareholders will each hold about 50 percent of the new company’s equity.

The tie-up could put pressure on rivals to do similar deals to keep pace.

French unions have called on the government to protect jobs and avoid a monopoly situation.

The proposed mega-merger could bring rival accounts such as Coca-Cola and PepsiCo under one firm, underscoring the scale of the deal and the potential conflicts it raises.

Presented as a merger of equals, the companies said it would give the combined firm the necessary scale and investment firepower to cope with rapid changes wrought by technology on the advertising business.

Turmoil in the industry

At a news conference in Paris, the chief executives of the two companies pledged they could handle concerns from major clients who may find the marriage too close for comfort, as well as address questions from regulators who are concerned about maintaining a competitive landscape.

“This is a new company for a new world,” Publicis CEO Maurice Levy said. “It will be able to face the exponential development of new internet giants like Facebook and Google, changing consumer behavior, the explosion of big data, as well as handle the blurring of roles of all the players in the market.”

Levy said both companies had years of experience setting up “strict firewalls” to protect clients’ interests. Even so, the deal is likely to create some instability as rival ad agencies try to poach clients while Publicis and Omnicom are distracted by the merger.

“This is going to cause turmoil within the industry,” said a senior industry executive. “Everyone is going to reassess where they stand and every company outside of Omnicom and Publicis will be all over their clients during this period.”