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Maurice Lévy, chairman of Paris-based Publicis Groupe. (JIM ROSS/THE GLOBE AND MAIL)
Maurice Lévy, chairman of Paris-based Publicis Groupe. (JIM ROSS/THE GLOBE AND MAIL)

Ad agencies Publicis and Omnicom say merger on track Add to ...

Publicis Groupe SA and Omnicom Group Inc. say their plan for a merger that would create the world’s largest advertising agency holding company is on track.

The message came this week as the two companies reported earnings for the first time since announcing their deal at the end of July. In comments to investors on Wednesday morning, Maurice Lévy, chairman and chief executive officer of Paris-based Publicis, said the process is under way to secure regulatory approvals for the cross-border deal, which is expected to close early next year.

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He also noted that, while critics have raised the possibility of client conflicts between the two networks’ agencies under the new Publicis Omnicom Group, reaction from clients on both sides “so far has been very positive.”

The combined company would bring together under one umbrella major ad agency brands such as Omnicom’s BBDO with Publicis-owned Leo Burnett and Saatchi & Saatchi. Through its media buying and planning agencies, it has been estimated that the combined company would control roughly 20 per cent of global ad spending.

The deal has already received approvals in South Korea and South Africa. The companies are seeking regulatory approval in 16 jurisdictions, encompassing 46 countries. In the United States, the Federal Trade Commission is currently reviewing the deal. The companies have been in discussions with European authorities since mid-September, and have filed paperwork with China’s Ministry of Commerce as well.

“We are on track,” he said.

Mr. Lévy also fired back at “competitors who love nothing more than speaking about this merger, maybe because they have not much to say about their own operations.” He reiterated statements made by both companies at the time of the deal, saying the merger will help the companies expand their global footprint and take better advantage of the growing importance of big data to marketing clients.

Speaking about the plan to run the new company in a co-CEO structure with Omnicom president and CEO John Wren, Mr. Lévy said they have developed “a great friendship and a very good relationship,” and pointed to their ability to combine efforts to travel and meet with important global clients. The companies are not currently planning to combine individual agency brands.

Starting Thursday, executives from both companies will be in a four-day meeting to discuss how the merger will proceed. “It’s all about trying to know each other. It’s about understanding each other, the culture, the process, the way we work, the assets and starting to build the process for the integration,” Mr. Lévy said.

“What will change and dramatically improve … is access to a more diverse portfolio of services, our global reach, as well as a deeper bench strength of digital and creative talent. Together, we will be able to serve our clients with exceptional expertise, collaboration and creativity in an ever-changing environment across a full spectrum of disciplines and geographies at scale,” Mr. Wren said in a conference call Tuesday to discuss the New York-based company’s earnings.

On Wednesday, Publicis reported third-quarter revenue of €1.68-billion ($2.34-billion), up 3 per cent from a year ago. Organic revenue growth, which excludes currency fluctuations and acquisitions, was 3.5 per cent, a drop from previous quarter amid weaker-than-expected advertising spending in China.

On Tuesday, Omnicom reported third-quarter profit of $196-million (U.S.). Revenue rose 2.5 per cent to $3.49-billion. Omnicom’s organic revenue rose 4.1 per cent.

Both companies noted stronger growth in advertising spending in the United States.

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