Omnicom, Publicis to Merge by Mid-2014

Zacks

Advertising behemoths Omnicom Group Inc. (OMC) and Publicis Groupe SA (PUBGY) recently announced that their proposed merger is expected to close by the middle of 2014. The deal was initially expected to be sealed in by the end of March.

The companies have cited some pending regulatory approvals, including approvals by Russia and the European Union, as a reason for the delay.

However, the merger deal has been approved by the U.S. antitrust authorities in the beginning of the month. Also, the regulatory authorities of Canada, India, Turkey, South Africa and South Korea, have given the merger their sanction.

Omnicom and Publicis, the world’s no. 2 and no. 3 advertising agencies, respectively, had signed a definitive agreement in July this year to create Publicis Omnicom Group. Arguably, the combined company would be globally the biggest communications, advertising, marketing and digital services company with equity market capitalization of approximately $35.1 billion.

This merger is anticipated to reopen avenues for growth and success for the individual companies. The merger will enable the agencies to make best use of their skilled workforce, diverse product offerings, and enhanced global footprint to leverage a list of global and local clients and reap synergistic benefits.

The Omnicom-Publicis merger has triggered the possibility of more consolidations in the industry going forward. The mergers have resulted in fewer big players in the advertising industry.

Analysts believe that the deal and eventual formation of Publicis Omnicom Group will topple WPP Plc. (WPPGY) as the no. 1 advertising company. WPP has been a front-runner in the advertising world since 2008. Moving forward, WPPmay also strive to regain its leading position by acquiring some other firms in the industry.

Omnicom currently holds Zacks Rank #4 (Sell). A better-ranked stock worth considering includes YuMe, Inc. (YUME), holding a Zacks Rank #2 (Buy).

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