Reports: Omnicom, Publicis Groupe In Advanced Merger Talks

(RTTNews) - Advertising companies Omnicom Group Inc. (OMC) and France-based Publicis Groupe SA (PUBGY.PK, PGPEF.PK) are in late-stage talks about a plan to merge, according to media reports on Saturday.

The deal, expected to be announced on Sunday, is likely to be structured as a merger of equals and create the world's largest advertising company, topping current leader WPP plc. (WPP.L, WPPGY.PK).

Omnicom and Publicis are currently the world's second and third-largest advertising companies. Both the companies have market capitalization of about $16 billion each. The deal is expected to take up to nine months to close.

According to media reports, Publicis Chief Executive Officer Maurice Levy and Omnicom CEO John Wren will serve as co-CEOs of the new company. Elisabeth Badinter, daughter of the Publicis founder Marcel Bleustein-Blanchet, is likely to be co-chairman of the new company along with Omnicom chairman Bruce Crawford. Badinter is Publicis' largest shareholder with a 9.1 percent stake and also serves as the company's board chairman.

The merged company, expected to be called Publicis Omnicom Groupe, would have market capitalization of more than $30 billion and annual sales of about $23 billion.

New York-based Omnicom's ad agencies include BBDO worldwide, DDB Worldwide and TWBA Worldwide, and media buyer OMD. The company's clients include food and beverage giant PepsiCo Inc. (PEP) and fast food giant McDonald's Corp. (MCD).

Publicis owns brands such as Leo Burnett and Saatchi & Saatchi in addition to media-buying company Starcom Mediavest. Its clients include French cosmetics company L'Oréal SA (LRLCY.PK), French car maker Renault SA (RNSDY.PK, RNSDF.PK, RNT.L), consumer goods company Procter & Gamble Co. (PG) and beverages giant Coca-Cola Co. (KO).

A combined company would have greater resources to compete in digital advertising and also be able to boost its presence in emerging markets. Publicis has acquired several digital advertising companies, such as Razorfish, Digitas and LBI, thus strengthening its presence in the digital advertising sector.

However, the deal might face scrutiny from antitrust regulators as the combination of the two companies would dominate the ad-buying world. The merged company would spend about a combined $100 billion a year, representing about 20 percent of the global media business.

A merged company may also face account conflicts, as the two advertising agencies work for competing companies.

OMC closed Friday's trading at $65.11, up $0.81 or 1.26 percent on a volume of 1.64 million shares. PUBGY.PK closed Friday's trading at $19.77, up $0.18 or 0.92 percent on a volume of 33,625 shares.