Omnicom/Publicis: Lessons in How to Keep Merger Clearance Traps From Derailing Your Deal
Advertising giants Omnicom Group and Publicis Groupe called off their US$35 billion merger on May 8, 2014, terminating a transaction that would have created the largest advertising company in the world.
Publicis chairman, Maurice Lévy, and Omnicom CEO, John Wren, said in a joint statement, “The challenges that still remained to be overcome, in addition to the slow pace of progress, created a level of uncertainty detrimental to the interests of both groups and their employees, clients and shareholders. We have thus jointly decided to proceed along our independent paths. We, of course, remain competitors, but maintain a great respect for one another.”1 While there were a number of reasons the deal collapsed nine months after it was announced, merger clearance — notably delays in securing antitrust clearance from China’s Ministry of Commerce in China — contributed to the demise.
The collapse is a huge setback for both companies and its employees. Nine months of distraction will have taken a toll, and it will be back to the drawing board as both companies seek other means to expand and improve their services, and realize efficiencies and reduced costs.
Please see full alert below for more information.
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Advertising giants Omnicom Group and Publicis Groupe called off their US$35 billion merger
on May 8, 2014, terminating a transaction that would have created the largest advertising
company in the world.
Publicis chairman, Maurice Lévy, and Omnicom CEO, John Wren, said in a joint statement,
“The challenges that still remained to be overcome, in addition to the slow pace of
progress, created a level of uncertainty detrimental to the interests of both groups and
their employees, clients and shareholders. We have thus jointly decided to proceed along our
independent paths. We, of course, remain competitors, but maintain a great respect for one
another.”1 While there were a number of reasons the deal collapsed nine months after
it was announced, merger clearance—notably delays in securing antitrust clearance from
China’s Ministry of Commerce in China—contributed to the demise.
The collapse is a huge setback for both companies and its employees. Nine months of
distraction will have taken a toll, and it will be back to the drawing board as both companies
seek other means to expand and improve their services, and realize efficiencies and
China Speed Bump
The parties announced the transaction in July 2013, and, by February, the parties had
secured unconditional merger clearances in no fewer than 12 jurisdictions, including Europe,
the United States, Canada, India, Turkey, South Africa and South Korea.2
But more than six months after the deal’s announcement, China clearance remained
outstanding. The transaction was filed with MOFCOM, the agency responsible for
administering merger control. MOFCOM is notorious for being the last jurisdiction to clear
a transaction that is subject to global filings, for a number of reasons, including the process
of inter-agency review. Parties may spend months negotiating with MOFCOM, but other
government agencies must review and approve the merger. Some merging parties have
complained that these other agencies often interject concerns, such as industrial policy,
unrelated to competition.
Omnicom/Publicis: Lessons in
How to Keep Merger Clearance
Traps From Derailing Your Deal
If you have questions or comments
regarding this Alert, please contact
one of the lawyers listed below:
George L. Paul
Partner, Washington, DC
+ 1 202 626 3656
Noah A. Brumfield
Partner, Silicon Valley/Washington, DC
+ 1 650 213 0395
+ 1 202 626 3698
Rebecca H. Farrington
Partner, Washington, DC
+ 1 202 626 3599
2 Press Release, November 13, 2013, http://newsflash.publicisgroupe.net/uploadedDocs/20131101_13-11-01_FTC_
ENG.pdf; Investor Presentation February13, 2014, at 36, http://www.publicisgroupe.com/en/media/display/id/7206.
2White & Case
MOFCOM recently implemented guidelines to speed review
of “simple” merger cases. These changes are welcome, but it
remains too soon to determine what effect this procedure
Even Local Deals Are Global and Global
Deals Are Local
Most merger clearance regimes require clearance before parties
are permitted to close the transactions. In other words, parties
have to clear each and every hurdle before they cross the finish
line. In Omnicom, the parties were clearly frustrated that China
was holding back its clearance. The parties had seemingly sailed
through major antitrust players like Canada, the EU and the
United States, and from small, yet sophisticated, regimes such as
Turkey, South Africa and South Korea. But this progress slowed
at China, and this can cause significant deal uncertainty, fear and
doubt. In this environment, the festering of culture clashes, the
loss of key talent, lack of focus of competition and ultimately the
collapse of the transaction, are all heightened risks.
For dealmakers, the increasing complexity of merger controls
demand they take affirmative steps to protect their deals.
Three critical planning steps are important to bear in mind:
■■ Plan ahead. In the past, antitrust counsel was often consulted
only late in the game—as an afterthought. No longer. Antitrust
counsel has to be part of the process at the early stages to
ensure that parties are aware and can plan for all potential
merger review filings, even in far-flung jurisdictions.
■■ Prepare for clearance timing. The timing of filings in multiple
jurisdictions has to be carefully coordinated with the closing
date and with careful attention paid to those jurisdictions
having pre-merger notification requirements, those that require
notice to be filed after the deal is complete and those that
■■ Centralize strategy. The deal needs to have a single point of
accountability to quarterback all the filings around the world
in order to ensure that something said to the authority in India
doesn’t come back to haunt you in Iceland.
Merger Planning and Information Sharing:
How Far Can You Go?
Merging parties typically engage in a wide variety of information
sharing and coordination, ranging from initial due diligence to
transition planning. Integration teams anxious to hit the ground
running often push to share competitively sensitive information
in an effort to make future planning more efficient. But the
Omnicom/Publicis collapse shows the potential dangers of
premature information sharing and the need for careful attention
to the process as much as the content.
Before a merger is consummated, the antitrust laws limit the
merging parties’ ability to share competitively sensitive information
and integrate operations. By following appropriate guidelines,
parties to a terminated merger can continue competing without
having compromised their competitive strategies.
■■ Companies should consult with antitrust counsel to manage
risks associated with obtaining necessary information for
diligence and integration purposes. Careful planning and process
documentation can reduce the risk of an allegation of improper
■■ Companies should avoid exchanging any information beyond
what is necessary for valuing the transaction and setting the
stage for post-merger integration. Detailed, current competitive
information presents the highest risk.
■■ Confidential information acquired during premerger due
diligence should be shared only with counsel and with business
people who have a demonstrated need to know, and not with
those individuals who could use it for competitive purposes.
■■ For necessary but extremely sensitive information, aggregation
or using third-party vendors (a “clean team”) to review and
summarize the information should be considered.
■■ Negative covenants (e.g., providing the acquiring party a right
to review high-threshold, material assumptions of liability)
have legitimate purposes. But care should be exercised in
determining their scope and potential carve-outs. Counsel
should be involved in both drafting and implementing such
provisions. Imagine the damage that can be done to a seller’s
business if it has foregone material contract renewals with key
customers in anticipation of a merger closing.
This Client Alert is provided for your
convenience and does not constitute
legal advice. It is prepared for the general
information of our clients and other
interested persons. This Client Alert
should not be acted upon in any specific
situation without appropriate legal advice
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In this publication, White & Case means the international legal practice comprising White & Case LLP, a New York State registered limited liability partnership, White & Case LLP,
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In summary, always recognize the importance of a robust integration planning strategy
that respects each party’s competitively sensitive information and avoids one party
assuming too much control too early. Our mantra for merging clients is “business as
usual” until closing.
Timing, Timing, Timing
Parties must focus not only on if they will secure merger clearances, but when. China is
the poster child for jurisdictions raising issues concerning timing. Exacerbating the problem
is that China’s merger control law is broadly written and construed so that many mergers
with only minimal contact with China may require MOFCOM’s review.
Each merger control regime is unique. The US Hart-Scott-Rodino form requires only
minimal information from merging parties, ensuring that parties can file early and start the
review period clock. In the EU, the Form CO requires much more substantive information
and therefore takes longer to complete, depending on the complexity of the transaction
and industry. It can require as little as a couple weeks for straightforward transactions to
several months for very complex deals. Once filed, each jurisdiction has its own review
procedures, which further complicates timing. As noted above, in China the review period
itself and the process for resolving any competitive concerns takes longer than it does in
most other major jurisdictions. As a result, the decision to file in China should not be taken
lightly, and parties must plan for a lengthy review period.
To accommodate the lengthy reviews, parties can ensure the termination dates in the
underlying agreements take this into account and make provision for the payment of
retention bonuses for key employees to reduce churn related to deal uncertainty. Most
importantly, however, is managing the expectations of all relevant stakeholders. If you
know delays are likely, the “challenges” of dealing with a slow “pace of progress” are
The collapse of deals because of the length of the merger control review process—as
opposed to substantive competition issues—is an unfortunate reality of a quilt-like merger
control process. Despite attempts at international cooperation to streamline the merger
control process, the differences between regimes can be vast. Fortunately, with small
but proactive steps, parties can mitigate the risk that lags in the global merger clearance
process could derail their merger efforts.
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