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Publicis to Focus on Digital Deals Post Omnicom Fiasco

Zacks Equity Research

Top management at advertising services provider Publicis Groupe SA (PUBGY) has recently vouched to focus on digital deals to resurrect the fortunes of the company that seems to have been hit by the failed merger with rival Omnicom Group Inc. (OMC).

Maurice Levy, the CEO of the company, debriefed investors on his plans to focus on the digital media – arguably the future of the advertising world, to bring the ad firm back on its growth track. Leveraging on its strong balance sheet, Publicis will also aim to reward its shareholders with healthy increases in dividends at periodic intervals. At the same time, the 72-year old CEO stated that management will soon address the succession issue to replace him at the helm, before his tenure expires by the end of the year.

Earlier, in May 2014, Publicis and Omnicom terminated their $35 billion merger proposal that would have possibly created the world’s largest advertising agency. The companies jointly declared that the deal was called off due to complications in finishing the transaction within a rational time period, creating ambiguity in the minds of the shareholders and other interested parties.

According to media reports, the deal fell apart nine months after it was announced due to a combination of conflicting personalities, management conflicts regarding integration of the companies and regulatory and tax snags. Top executives reportedly vied for key management spots in the combined entity and disagreements were rife over assuming the controlling stake in the new company. Also, China’s antitrust regulator had not approved the deal, further delaying the process.

Putting aside the disappointment of the failed merger bid, Publicis now intends to focus on the road ahead and successfully begin a new chapter to reinforce its position as a leading standalone advertising and communication services company.

Headquartered in Paris, France, Publicis offers interactive communication services, online direct marketing consulting, social network expertise, e-commerce, search engine optimization, Internet ads, and various forms of Internet and mobile communication services.

Publicis currently has a Zacks Rank #3 (Hold). Other players in the industry worth mentioning include Coupons.com Incorporated (COUP) and Sizmek Inc. (SZMK), both carrying a Zacks Rank #2 (Buy).

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