Sorrell: Publicis-Omnicom Deal `Doesn't Add Up'

REPLAY VIDEO
Your next video will start in
Pause

Recommended Videos

  • Info

  • Comments

  • VIDEO TEXT

July 29 (Bloomberg) -- Sir Martin Sorrell, founder & CEO at WPP, reacts to the advertising mega-merger between Publicis and Omnicom. He speaks on Bloomberg Television's "Bloomberg Surveillance."

If publicis, the french company, swallowed up by omnicon, the american comedy, can the french government allow it?

A really interesting question, tom, but it is a merger of equals -- or actually merger of unequaled because if you look at relative revenues, omni con, $14 billion of revenue and publicic, 8 -- the french companies better run.

But they both get 50%. they will have co-ceo's. the last merger of equals we had i think was daimlerchrysler, which did not go well.

I think one has to take once had off for engineering an incredible deal to end up on a 50-50 basis.

He will become chairman and three or four years and having the co-ceo's which is an uncomfortable structure.

To go back to the question about who has control, i think the critical issue is who will be cfo of the combined operation.

If it is being french ceo, obviously the french will feel more comfortable.

And if it is randy wise river, the american, they may find it extremely uncomfortable.

We will see what happens.

Sir martin, is this a good thing for you, because a lot of talent will exit this merger of dinosaurs?

I do not know about dinosaurs.

A big unfair.

Why did they call it omnicom and publicis, it would make it oap , old age pensioners.

If you take the colors -- mix them, you get a muddy brown or gray.

Quite interesting to speculate on what these two companies will look like together.

I would not call the dinosaurs.

But you are right, tom, that the strategies have been completely different.

Publicis, like ourselves, have been focused on fast growth markets in digital.

As a result of that transaction, those proportions combine -- decline in the combined operations and we will have the largest, fastest-growing market in digital exposure.

Secondly, omnicom 's strategy was always to ignore fast growth markets and digital and effectively they are buying a big roll up of those areas.

It is very expedient.

But again, you have to applaud the french -- much as some of us find it difficult to do -- you have to applaud the french for a brilliantly engineered deal which probably in the uk market would not happen because nobody would accept a nil premium merger.

Sir martin, it is sara.

No matter how you look at the strategies, it would be a giant company and it would overtake your company, wpp, as the worlds largest advertising firm.

Is being the world largest largest advertising firm an important thing for you?

We were number two, the number one, the number two, the number one, number two again.

If the deal goes through.

If you look on scale -- if you look at europe, asia, latin america, africa, the middle east, -- in asia and europe we will still be larger in terms of gail, media planning and buying.

In america, they will be significantly larger.

I think that is where the regulators will look at the issue.

Certainly media earners and certainly clients i think are concerned about it.

Bloomberg had this story on july 18 and 19th, and they actually ran the story, single source on friday night.

I think it ran at of the schedule and timetable that omnicom and publicis are running and i think it left them a bit short on clients.

Coming back to tom's question -- i think what we are seeing in our industry now is the industry gaining a state of equilibrium, much more of an equilibrium now than it had.

There was going to be further consolidation.

We always said it on bloomberg and elsewhere.

But now i think there is a state of equilibrium that gives us a chance really to build organically.

Because, as tom indicated, it will mean that clients and people will reassess their plans and it is a big, organic opportunity for wpp.

You talk about a big, organic opportunity.

What is keeping you from going out and making a bid right now?

I said organic.

I think that is where the opportunity is.

More recently be himself said he consider two other opportunities apart from omnicom.

The other one was ipsos -- the other one was ipsos, i think.

He rejected them as being too expensive.

When you look at the deal, you can see why.

Really merged with omnicom on an extremely attractive aces.

But i do not think it is necessary for there to be either consolidation at least from our point of view.

We have the scale.

We have the quality.

We are very focused on fast- growing markets, consumer insight, and then building -- and a time we got left with you, there is a 35 year old today, and omnicom and publicis are going, what happened over the weekend?

What is your number one selling point to drag the star performer over to wpp?

There is going to be considerable uncertainty over the next 30 months as both organizations struggle for control.

There is no such thing as a merger of equals, as you well know.

There are only things such as acquisitions.

It is all a question of who is going to run the company.

In those two companies, you have two contrasting styles.

You have publicis, highly centralized.

And then you have omnicom, highly decentralized out of new york and florida.

It is a very different approach.

I think the two companies are going to come over the next 30 months -- and i think beyond that -- are going to have to wrestle with that.

It is a very, very big company, as you said, with multiple brands which at least is going to result in consolidation.

Yesterday they said there were $500 million of synergies and they said there would be no headcount reductions.

That doesn't add up.

Sir martin sorrell, thank you so much.

Greatly appreciated.

From wpp.

This text has been automatically generated. It may not be 100% accurate.

Advertisement

BTV Channel Finder

Channel_finder_loader

ZIP is required for U.S. locations

Bloomberg Television in   change