May 9 - Publicis-Omnicom's $35 billion merger collapses amid a raft of differences over how to create the world's largest advertiser. Ivor Bennett ask where it leaves the two companies - and the other big player in the sector, WPP.
Looking back now, it's hard to believe the enthusiasm. The hugs and handshakes to celebrate what would have been an historic union. According to CCLA's James Bevan though, the doubts were always there. SOUNDBITE (English) JAMES BEVAN, CHIEF INVESTMENT OFFICER, CCLA, SAYING: "I think a lot of people questioned the industrial logic of bringing the two together. We had two very different cultures, different creative talents, quite hard to see where the synergies were really going to come from." The proposed Publicis Omnicom merger would've created the world's biggest ad agency. Bringing with it, though, a raft of regulatory headaches. The choice of CFO was another crucial sticking point. And after 10 months of bickering, the road ahead could be bumpy. SOUNDBITE (English) JAMES BEVAN, CHIEF INVESTMENT OFFICER, CCLA, SAYING: "I worry in terms of the short term outlook for the share price of Publicis. Because I do think people will be anticipating they will want to make another acquisition. I think Omnicom in contrast will go back to buying its own shares. And this is an environment where people will think about the sector writ large. And I suspect that WPP will come into the frame as people will say look, 'it's not after M&A but it's in a very good position to make a lot of money'." The collapse leaves WPP as the industry's dominant force. But according to CEO Martin Sorrell, the firm was better off while the deal was still on, poaching clients since it was announced last July. SOUNDBITE (English) MARTIN SORRELL, CEO, WPP, SAYING: "The best case would've been for it to continue ad nauseam but unfortunately it hasn't. I think we all thought it was going to collapse, or certainly we did, but we didn't think it was going to collapse so quickly." Big ticket mergers have been the talk of the market in recent weeks. Despite this one falling through, the outlook remains strong. SOUNDBITE (English) JAMES BEVAN, CHIEF INVESTMENT OFFICER, CCLA, SAYING: "There is after all around two and half trillion dollars to spend, if companies take leverage back to the normal levels in North America and Europe. There's another one and quarter trillion dollars of private equity cash still to be deployed. And that for me is an absolute recipe for people to want to make significant acquisitions." In advertising too, more deals are expected. Interpublic Group and Havas the names being mentioned.