Maurice Levy on Omnicom Merger: 'Life is Good for Publicis Whatever Happens'

Organic Revenue Grows Faster, Omnicom Deal Approval Slows Down

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Maurice Levy
Maurice Levy
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Publicis Groupe said organic revenue grew 3.3% in the first quarter of the year compared to a year earlier, up from a weak 0.7% increase in the final quarter of 2013. Revenue, 41% of it digital, increased 2.2% to $2.2 billion, the company said.

In North America, organic revenue growth reached 4.3%, while in Europe it was 2.1%, helped by a buoyant Germany (up 9.9%) and a return to growth for Spain (1.1%) for the first time since 2011, but held back by a generally weak southern Europe and a 1.6% decline in the U.K.

Organic revenue in the BRIC countries -- Brazil, Russia, India, China -- and MISSAT -- Mexico, Indonesia, Singapore, South Africa and Turkey -- edged up 0.5%. The area called Greater China (including Hong Kong and Taiwan) posted 0.2% growth after a fall of 10.8% in the fourth quarter. Brazil was up 3%, Russia up 7.6% and Turkey up 23.8%, but declines hit the business in India (down 18%), Africa (down 6.2%) and Mexico (down 3.3%).

Publicis Groupe Chairman-CEO Maurice Levy expects a "better situation everywhere, including Europe" this year, he said at a results presentation in Paris this morning.

Questioned by analysts about the proposed merger with Omnicom Group, Mr. Levy admitted that he has been asked a few times recently what would happen if it is called off. "I have to say again and again and again that I am confident the deal will go through," he said.

"I would like to stress that Publicis has a very clear strategy with strong objectives and a strong position and I do believe we are the best holding company in our sector for the future, bar none," he added. "There is no issue if we go back to a standalone company. Life is good for Publicis whatever happens."

The slow pace of the Chinese regulatory authorities is likely to push the deal back to the end of the third quarter, he said. When Publicis and Omnicom first said last summer that they planned to merge, they said the combination could be completed as soon as the end of 2013.

Mr. Levy again pinned the delay primarily on Chinese regulators. "The dialogue with the Chinese is very good -- extremely professional and very respectful -- it's just slow," he said.

The delay had impacted the sense of urgency of the 70 "work streams" assigned to smooth the merger between the two groups, Mr. Levy said.

The China delay is having a knock-on effect in France. Under French law, Publicis shareholders will have to pay tax on any profit incurred when they swap Publicis shares for Publicis Omnicom shares. Mr. Levy and his team are working with the French authorities to try and waive this law, but until the merger is approved in China, there is no urgency from the French side, he said.

"We need a tax-free operation for our shareholders," Mr. Levy said. "We have to get it prior to the merger. We have to get a specific ruling. We are not asking for something exceptional."

Mr. Levy denied that the merger was causing a distraction from Publicis Groupe's daily business. "We are in a lot of pitches and we have a lot of leads," he said. "These have not slowed down because of the merger or because our teams are busy doing something else. The teams who are occupied on the work streams are not the client people, they are management people, and there is a certain elasticity in the time that people can spend when they are at this level. Elasticity means they can start at 6 in the morning and finish at 11 in the evening."

That last remark got a reaction from people sitting with him. "Some people are laughing around the table," Mr. Levy continued. "I don't know why! "

Publicis Groupe companies include Leo Burnett, Saatchi & Saatchi, Publicis, Bartle Bogle Hegarty, ZenithOptimedia and Starcom MediaVest Group.