Omnicom-Publicis Bust-Up Shows Limits of Holding Co. Model
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From the biggest bang to the littlest whimper in just nine months.
The proposed Publicis-Omnicom merger was stunning in size. The announcement made the industry ponder its future, and the dissolution does the same, calling into question the kind of scale a holding company can achieve, how fast and at what cost.
The deal’s autopsy will reveal internal trauma, and possibly death by fear of taxes. But it never completely made sense, at least as described by the companies. The proposed savings ($500 million) were relatively paltry for a $35 billion tie-up, and the strategic logic wasn’t completely evident beyond “big equals better.” If it had been, the companies’ respective share prices would have reflected it, and walking away wouldn’t have been an option (shareholders on at least one side would have revolted). Instead, Omnicom’s shares were up the day after the deal was squashed; Publicis’ stock fell slightly. Overall, they barely budged during the engagement.
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