Publicis and Omnicom Prep Integration Committee to Steer Mega Merger

Task Force of Leaders Will Be Named at Upcoming Meeting in Miami

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Publicis Groupe and Omnicom are both feeling good about their prospects for a merger of the two ad behemoths to be approved by regulators across global markets. And now, the companies are trying to get their ducks in a row to plan just how the two companies will come together.

Publicis Groupe Head Maurice Levy
Publicis Groupe Head Maurice Levy

Maurice Levy, Publicis Groupe's chairman-CEO -- while addressing analysts and press about the company's third quarter earnings on Wednesday -- said that an integration committee will be set up shortly, and co-chaired by Mr. Levy and Omnicom Group's CEO John Wren.

This task force will be made up of equal numbers of executives from both Omnicom and Publicis. Their job will be to look at all areas of integration and to co-ordinate specific teams to plan ahead and to deal with any issues that arise. The names of the people on the core team -- giving a clue as to who will lead the merged group -- will be announced at a management meeting of senior execs being held this week at The Four Seasons hotel in Miami. The meeting "Is all about trying to know and understand each other – cultures, processes, and assets – and starting to build the process for integration," Mr. Levy said.

Regulatory Hurdles

Like Mr. Wren, he expressed optimism that the deal would be cleared across global markets.

"I don't anticipate any major issues," said Mr. Levy. "The hard work is behind us –now it's just a process that we have to follow cautiously. I'm optimistic, based on the opinions of lawyers and economists who've worked on market share issues."

The merger has been cleared in South Africa and Korea and clearance for the merger in Brazil and Mexico is "more a formality," Mr. Levy said. In the U.S., anti-trust filing was made at the beginning of October, and in Europe, draft notification has been discussed with the European Commission since mid-September. In China, a draft filing has been provided to MOFCOM (the nation's Ministry of Commerce).

Asked on an analyst call if clients were expecting to share in the synergies, Mr. Levy said, "No client has raised that question with me. Maybe it's because they are polite but no one has said that they are pleased because their fees will be down. They have said they are pleased because we will be stronger with a broader range of services."

Mr. Levy insisted that this would be a "best in class merger," and that the scale of the merged group would help it to develop new approaches on big data. However, he insisted, "Creativity can never be replaced by algorithms."

He talked about when he first joined the business as a "techie," writing algorithms and programs. "I delivered the first optimization for audience and investment in the French market in the second half of the 60s. I wanted to see if we could use computers to help creative people – but we found [computers] could do very little when it comes to big ideas and emotional connections."

Third-Quarter Results

Mr. Levy was speaking at Publicis Groupe's third quarter results presentation, where he reported organic growth up 3.5% (3.3% year to date) and revenues of $6.8 billion, with North America reaching 4.5% organic growth. BRIC and MISSAT grew at only 1.5%, partly due to a slowdown in Greater China where growth was a relatively modest 2.4%.

Mr. Levy said he was confident that the Greater China slowdown would be temporary. He said that the group is reducing its reliance on luxury goods, which account for a significant proportion of Publicis clients in the region, and have seen a slowdown in sales growth.

The "rest of the world" – which includes Australia, Korea and Argentina -- grew by 10.1%, and Europe by 0.4%.

In North America, digital has grown at 11.3% across the year to date, and contributed more than half group revenues, reaching 51.8% in the third quarter.

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