The proposed $35 billion merger between U.S.-based Omnicom Group Inc. and French rival Publicis Groupe SA has been called off as the challenges in forming the world's largest advertising agency proved too immense for the partners.
Presented in July as a merger of equals, the deal began to seriously unwind after Omnicom Chief Executive John Wren expressed doubts about the deal, citing tax complications, during an earnings call in late April.
"The challenges that still remained to be overcome, in addition to the slow pace of progress, created a level of uncertainty detrimental to the interests of both groups and their employees, clients and shareholders," Wren and Publicis CEO Maurice Levy said in a joint statement on Thursday. "We have thus jointly decided to proceed along our independent paths. We, of course, remain competitors, but maintain a great respect for one another."
The deal announced in July was called off over a number of sticking points including the companies' failure to agree on a chief financial officer who would have taken charge of implementing the deal, a source close to Publicis said.
Neither company will pay a termination fee.
Another source familiar with the matter said broader cultural differences between the two companies proved to be too difficult to overcome as tension over leadership and strategy came to a head. The boards of the two companies met on Thursday to unwind the deal, a third source said.
All three sources requested anonymity because they are not authorized to discuss the matter publicly.
The merger called for a 50-50 ownership split of the equity in the new company, Publicis Omnicom Group, with Wren and Levy serving as co-CEOs for 30 months from the closing.
One of the sources said that "big egos" were involved.
The crucial choice of CFO, a key position that would determine how the company would operate, hewing either to Publicis' centralized structure or Omnicom's less controlling approach to subsidiaries, had been a particular sticking point as the months dragged on.
As the companies struggled to keep the merger on track they had faced a fight to retain clients and talent.
Wren and Levy, celebrating the deal with champagne toasts in Paris last summer, said it would enable them to better compete with the likes of Google Inc and Facebook Inc which dominate digital advertising, which accounts for nearly a quarter of global marketing spending.