Omnicom CEO John Wren: 'No Plans to Merge Individual Agency Brands'

Company Optimistic That Massive Tie-Up With Paris-Based Publicis Groupe Will Close in Early 2014

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Omnicom CEO John Wren on Tuesday -- while speaking to shareholders and analysts about the company's third quarter results -- said its merger with Publicis Groupe is on track to close in early 2014.

Pending Merger of Publicis and Omnicom
Pending Merger of Publicis and Omnicom

"It is going well," Mr. Wren said, noting that the approval process -- whereby regulators in different markets are scrutinizing any antitrust issues -- is underway in more than 40 countries. So far, South Korea and South Africa are the only markets to rubber-stamp the deal. "As we clear major hurdles, as we go through this, we will inform the public" Mr. Wren said.

"There's an integration process that [Publicis Groupe CEO Maurice Levy] and I and our management team have agreed to," which is focused on "the most sensible, profitable, thing to do in the priority we should act once the deal is approved." Mr. Wren added that the two companies are preparing to meet to discuss those integration plans this month (a reference to the news Ad Age broke of a quiet gathering of key leaders from Publicis and Omnicom that will take place at the Four Seasons hotel in Miami).

John Wren
John Wren

During the call, Mr. Wren spent a significant amount of time touting the benefits of Publicis Omnicom for employees, and a bit less on the impact on clients. "There is no group that can possibly offer better career prospects," he said, claiming that in speaking to some employees, he's found that "there's an air of excitement about the merger and a clear sense of the opportunities it creates."

Still, many employees are likely fearing for their jobs in the run-up to the merger's approval since deals between similar firms often lead to the elimination of redundant positions. Clients too are probably nervous that such decisions could disrupt their business.

To try to allay their fears, Mr. Wren stressed that as the two firms merge, "we will continue to deliver the work and service they are used to." Perhaps most surprisingly, he said: "There are no plans to merge individual agency brands." Instead, he emphasized the benefits of maintaining distinct agency brands at Publicis Groupe and Omnicom. "Having an agency that has its own unique identity and culture" is important, he said. He later went on to suggest that cost savings and efficiencies will be derived more from real estate and third-party costs like auditors.

Of course, saying there are 'no plans' to merge agencies doesn't necessarily mean it won't happen. It's hard to imagine that in combining two corporations that have similar types of assets that management won't try to find some synergies and align businesses. Though Publicis is stronger in digital and Omnicom is stronger in CRM and public relations, both have an array of creative networks and media agencies that offer similiar services in the same geographies.

Omnicom's worldwide revenue in the third quarter of 2013 increased 2.5% to $3.49 billion from $3.4 billion in the same period last year. Domestic revenue in the quarter was up 3.2% to $1.82 billion compared with $1.76 billion in the third quarter of 2012. From an organic growth perspective, the U.S. and U.K. were strong, but the Eurozone is still a challenge, the company said.

It also noted that it took a $28 million pre-tax charge, which it described as being in relation to the proposed merger with Publicis Groupe announced in late July, but didn't give any further color.

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