Two of the world's largest advertising holding companies -- Omnicom Group Inc. in New York and Publicis Groupe in Paris -- have agreed to merge into the world's largest agency with a market value that would exceed $35 billion.
The two companies announced the all-stock transaction Sunday. Shareholders of each company would hold about 50% of the new entity, which would be called Publicis Omnicom Group.
Omnicom is the parent company of TBWA\Chiat\Day of Los Angeles, which creates advertising for such high-profile accounts as Pepsico Inc. and Nissan; BBDO Worldwide agency; and OMD, which handles ad buying duties for film studio Warner Bros., among others.
Publicis Groupe owns such ad firms as Saatchi & Saatchi, which handles advertising for Toyota, and Leo Burnett in Chicago. Publicis also boasts the Chicago advertising buying powerhouse Starcom MediaVest.
The two companies had combined 2012 revenue of $22.7 billion. The merged group will have more than 130,000 empoyees and be jointly managed by Publicis Groupe Chief Executive Maurice Levy and Omnicom Chief Executive John Wren.
The merger is intended to give the new company more clout when negotiating advertising rates and placements with television networks and Internet companies.
The boards of both firms have approved the merger, which will be subject to numerous regulatory reviews as well as the approvals of shareholders of both companies.
The deal is expected to close in the first quarter of 2014. The new entity is expected to be listed on the New York Stock Exchange and Euronext Paris.
"The communication and marketing landscape has undergone dramatic changes in recent years, including the exponential development of new media giants, the explosion of Big Data, blurring of the roles of all players and profound changes in consumer behavior," Levy said in a statement.
Wren, in the statement, said that he and Levy believed "this new company reflects our vision of retaining the best talent, attracting an incredible roster of clients and leading innovation."
Rival executive Dominic Proctor, who is global president of GroupM, the media investment unit of the competing firm WPP, called the planned combination "interesting."
"They are making it clear that a primary motive for the merger is achieving scale in media buying," Proctor said in a statement. "However, neither Omnicom nor Publicis was able to bring their investment teams together effectively as individual companies, so it will be fun to see if they can now do it together."
Moelis & Co. was the financial advisor to Omnicom. Rothschild was financial advisor to Publicis Groupe.
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