New York-based Omnicom Group Inc. and Paris-based Publicis Groupe SA, the world's second- and third-biggest advertising companies, announced on Sunday that they will merge.
The resulting company, named the Publicis Omnicom Group, will have a stock market value of $35.1 billion and 130,000 employees.
The merger dilutes the French-ness of one of France’s iconic companies, but at a news conference on Sunday, Publicis CEO Maurice Levy said the French government has “tremendous support” for the deal. He said the new holding company will be registered in the Netherlands but keep headquarters in Paris as well as New York.
The companies, each of which has a market capitalization of about $16 billion, are calling it a merger of equals.
Omnicom owns BBDO, TWBA Worldwide and OMD. Publicis owns Leo Burnett, Saatchi & Saatchi and Starcom Mediavest.
Omnicom Chief Executive John Wren, 60, and Levy, 71, will serve as co-CEOs to start, with the younger Wren becoming sole chief executive in 30 months.
The deal will have to win the approval of government regulators.
"Antitrust issues may play out in the United States because the combined entity would account for about 40 percent of the ad spending on national TV networks" in the US, Brian Wieser, an analyst with Pivotal Research Group, told the Wall Street Journal.
The company will also have to difuse conflict-of-interest concerns among clients, since its ad firms would represent several rivals, including both Pepsi and the Coca-cola Co.