Publicis Groupe SA (PUB) and Omnicom Group Inc. (OMC) have merged together all-stock transaction to create the world's largest advertising company, bringing in $23 billion dollars in revenue and will be worth more than $35 billion. This has become instant news in the advertising industry, as the recent merger has risen above the company that used to be leader in the market until recently, WPP Plc. (WPP), and has taken the record of being the biggest deal in the industry.
"The alliance will bring under one roof agencies including Omnicom’s BBDO Worldwide and Publicis’s Leo Burnett and Saatchi & Saatchi, extending their presence in every major market. The merger will also give the owners more clout to negotiate for their clients better ad rates for media placements on television, the Internet and in print, as the global advertising industry has started to show signs of a recovery." (http://www.bloomberg.com/news/2013-07-28/publicis-to-merge-with-omnicom-to-form-biggest-advertising-firm.html)Opinions on the surprising decision have stated that such a change will be too much to handle for the merged companies. Specifically, concerns have fallen on to whether their client will benefit from this, and if the company will continue without laying the 130,000 employees (they now have combined) off. Yet its stated that it would become a way to create networks of agencies and PR firms withing the merger, and the two large top-rate company will work separately to avoid problems. Problems from having competitors under the same firm such as Coca-Cola Co., PepsiCo, McDonald's, Yum Brands' Taco Bell, Johnson & Johnson and Procter & Gamble. Other concerns have come up as to who will run this large ad firm, was answered when news stated that there will continue to be led by both originals CEOs' and rotate positions.
"The combined company will be called Publicis Omnicom Group and be jointly led by Omnicom CEO John Wren and Publicis CEO Maurice Levy as co-chief executives. The move is designed to bolster the companies' focus on growing Asian and Latin American markets such as China and Brazil, where they each have ramped up operations to counter lackluster growth in weak European markets."http://www.stamfordadvocate.com/news/world/article/Omnicom-Publicis-merge-forming-biggest-ad-firm-4691675.phpHow they ran will be have to be thoroughly reviewed, as these companies could also clash from the having based in different countries. Though the company will have its tough moments getting used to the new changes, it will obviously bring in benefits as well. Either way, the company will need to adapt and figure out how they will generate the $500 million dollars in profit they promised have to make from this merger.
"Omnicom will benefit from Publicis' strategic shift in the last few years toward digital operations, as the French company beefed up its digital marketing profile with the acquisitions of Digitas, Razorfish, Rosetta, Big Fuel and LBi. Publicis, which had revenue of $8.78 billion in 2012, had targeted generating 75 percent of its revenue in digital and fast-growing countries by 2018, according to a recent investor presentation."
Sources:
http://www.bloomberg.com/news/2013-07-28/publicis-to-merge-with-omnicom-to-form-biggest-advertising-firm.html
http://www.timeslive.co.za/world/2013/07/28/omnicom-publicis-merge-forming-biggest-ad-firm
http://www.stamfordadvocate.com/news/world/article/Omnicom-Publicis-merge-forming-biggest-ad-firm-4691675.php
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