The failed merger between Publicis Groupe and Omnicom Group gradually lost momentum and became mired in multiple issues, but Maurice Levy said the trigger for him was Omnicom's first-quarter 2014 results call with analysts, when CEO John Wren discussed details of the merger.
Trigger Moment for Levy? Wren's Merger Comments During Q1 Results Call
"I wasn't informed," said Mr. Levy, Publicis' chairman and CEO. "We had an agreement we should coordinate what we say about the merger."
On that earnings call in late April, Mr. Wren talked at length about some U.K. tax issues and other deal complications.
Mr. Levy said it "started to become a possibility" on May 1 that the deal would not close. That was the day he called his lawyers and asked if they could find a solution. "They talked with Omnicom lawyers and said it's possible to come to an agreement to unwind the deal. I said 'let's examine it'. That took from May 1 until yesterday."
Before that, the two groups were already dealing with several important issues.
"One was the administrative one, with China and tax issues," Mr. Levy said. "The other was organizational and who was in charge, and the third was implementation of shared services [and the model for that]. We went back and forth for months to see how to come to an agreement about implementation of shared services and the organization and weren't able to fix it."
"On top of that, momentum had been lost," he added.
Omnicom denied there was a specific trigger, saying instead it was a combination of "time and complexity."
"Our perspective (similar to Publicis), is there were many complexities related to the deal -- tax, anti-trust, financial regulatory, management structure, cultural differences," an Omnicom spokesperson said. "At the same time, we thought it would take about six months to complete. After nine months, there were still many key issues open with no clear finish line in sight. In personal service businesses, uncertainties and indecision don't bode well for our people and stakeholders. There wasn't any one trigger -- just time and complexity."
Mr. Levy said it took until about 2 a.m. Paris time to reach final agreement, sign everything, and hold the board meeting so the two companies could release each other from the deal with no termination fees.
After all that was complete, he said he notified clients by email and has been pleased by their response.
"They consider it's much better to stop before going to the church," he said. "They believe if the merger was unbalanced, it would have been unacceptable to them. There was a lot of declaration of love that leaves me blushing."
For the future, Mr. Levy said, "We have a strategy, and we will accelerate that strategy. It calls for strengthening our digital operations to reach 50% of our revenue [from 40% currently], and investing in big data and accelerating the capabilities we have in integration. Life [was] good with the merger and we wished it to happen. Life is also good with Publicis as a standalone."