Tomahawk, WI 05/13/2014 (Basicsmedia) – The two advertising giants, Omnicom Group Inc. (NYSE:OMC) and Publicis Groupe S.A. (ADR) (OTCMKTS:PUBGY) have called off their $35 billion merger, according to sources.

The deal that had originally been termed a “merger of equals”, had been confronted by encounters over position and power. This included problems in acquiring tax and other regulatory approvals, as well as differences over which company would be listed as the technical acquirer of the other.

Hypothetically, this megamerger would have given birth to the world’s largest ad holding company in terms of revenue.

The Failure Of A Potentially Utopian Merger

Both companies had made it clear that the merger was to be one of equals, where the shareholders would each receive roughly 50% of the equity in the new company that was to be formed. The proposed “Publicis Omnicom Group” was also supposed to have two CEOs who would have shared the same job for a period of 30 months from the time the deal was meant to be concluded.

But in spite of this merger-of-equals tag, mergers, for accounting reasons, only function when one company has acquired the other. Neither side had agreed on which group would be the acquirer of the other – a problem which resulted in paperwork delays with the U.S. SEC.

Additionally, there were delays in getting a hold of regulatory approvals, particularly in China. Relations between the two groups had been damaged at the same time as well, as they had been at arguing over whom would take up the role of CFO.

The Aftermath

Recently, both groups came to recognize that there had been too many obstacles to deal with, and that it would take a long time to do so. Neither of them has to pay a $500 million breakup penalty if the deal fails due to their inability to get a hold of the necessary regulatory approvals.

For the Publicis group, the absence of this deal will certainly put pressure on Mr. Lévy, who is 72 years old at present, since it would helped in taking care of a succession issue for the company.

Executives from Publicis suspected that if the Publicis-Omnicom deal didn’t materialize, Mr. Lévy would persist with his efforts to buy out or take over other advertising and marketing companies, particularly in the sphere of digital space.

However, both Publicis Groupe S.A. (ADR) (OTCMKTS:PUBGY) and Omnicom Group Inc. (NYSE:OMC) cited that they were in need of this deal so that they would be in a better position to compete with Silicon Valley companies like Google.

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