Read as much as you want on BostonGlobe.com, anywhere and anytime, for just 99¢.

Omnicom, Publicis to merge, creating top ad company

New firm will be worth $35.1b

Maurice Levy (left), chief executive of Publicis, and John Wren, the head of Omnicom, exchanged a pencil during a signing ceremony prior to Sunday’s news conference in Paris.

Francois Mori /Associated Press

Maurice Levy (left), chief executive of Publicis, and John Wren, the head of Omnicom, exchanged a pencil during a signing ceremony prior to Sunday’s news conference in Paris.

PARIS — Two leading advertising companies, Omnicom Group and Publicis Groupe, on Sunday announced a merger that would create the world’s biggest family of agencies, with a stock market value of $35.1 billion and 130,000 employees.

The combination of Publicis, based in Paris, and Omnicom of New York would supplant the advertising industry leader, WPP of London.

Continue reading below

Although Omnicom is slightly bigger than Publicis, the deal is designed as a merger of equals, combining companies that had total revenue of $22.7 billion last year. The new company would be called Publicis Omnicom Group.

In the early going, at least, the combined company would have co-chief executives: John Wren of Omnicom and Maurice Lévy of Publicis. But after 30 months, Wren, who is 60, would become sole chief executive and Lévy, 71, would be nonexecutive chairman.

The marriage, if it passes muster with antitrust regulators in the United States and Europe, and is given the blessing of the French government, would bring under one roof separate networks of ad agencies — including BBDO, TBWA, and DDB under Omnicom, and Leo Burnett and Saatchi & Saatchi under Publicis.

Collectively, the conglomerates represent some of the world’s largest brands, including AT&T, Visa, and Pepsi at Omnicom and McDonald’s, Coca-Cola, and Walmart at Publicis.

Lévy and Wren kicked off a heavily attended press briefing by signing the deal under a bright Parisian sun on the roof of Publicis headquarters on the Champs-Élysées, with the Arc de Triomphe looming in the background.

“Voilà!” Lévy exclaimed with the flourish of his pen.

Shareholders of each of the companies will hold 50 percent of the equity in the new company, which will be listed on the New York Stock Exchange and Euronext Paris and included in the S&P 500 and CAC 40. There will be a single board of directors that will include Wren and Lévy and seven representatives from each of the two merging companies.

In a statement, Lévy cited technological advancements in advertising and the rise of so-called Big Data — the ability to amass larger volumes of consumer information and make money from it in various ways — as reasons for the merger between the two companies.

The new company will dethrone WPP from the top spot as the largest advertising company in the world. Lévy and Martin Sorrell, the chief executive of WPP, have been public rivals for years.

Asked Sunday what a combined Publicis Omnicom would mean for WPP, Lévy said Sorrell would continue to be “a very strong competitor.”

“We respect WPP enormously,” Lévy said. “We do not define our strategy in regard to what he will think or what he will do,” he said, referring to Sorrell.

At least one competitor was willing to comment Sunday — if only to deride the merger strategy. David Jones, the chief executive of Havas, a competing French advertising holding company, referred to the deal as “an industrial merger in the digital age.”

“Clients today want us to be faster, more agile, more nimble and more entrepreneurial — not bigger and more bureaucratic and more complex,” Jones said in a statement.

Jones said the advertising industry’s “obsession with mergers and acquisitions” was out of sync with how other tech companies operate. “The industry’s obsession with mergers and acquisitions still amazes me particularly in a world where digital and technology have made scale irrelevant.”

He noted that the photo-sharing service Instagram has 32 employees, but 140 million users. Facebook, he said, has but 5,000 employees supporting 1 billion users.

“In a people business, mergers and acquisitions rarely create value in the way they do in industrial businesses,” Jones said.

Some analysts wondered whether the US Justice Department would approve such a merger or whether the French government would bristle at a company that was not solely run by a French national.

In a report issued Saturday as word of the merger was circulating, Brian Wieser, a senior research analyst at Pivotal Research Group, wrote that antitrust concerns could be eased if the new company positioned itself less as a conglomerate of ad agencies and more of a data company competing with businesses like IBM and Facebook.

It was not clear what position French President François Hollande’s government might take on the merger. Calls during the weekend were not returned. Publicis is considered a French national champion, and officials have been active during Hollande’s tenure about protecting French business icons from foreign dominance.

Loading comments...

You have reached the limit of 10 free articles in a month

Stay informed with unlimited access to Boston’s trusted news source.

  • High-quality journalism from the region’s largest newsroom
  • Convenient access across all of your devices
  • Today’s Headlines daily newsletter
  • Subscriber-only access to exclusive offers, events, contests, eBooks, and more
  • Less than 25¢ a week