The planned merger of
The deal was designed to give the new company more leverage when negotiating advertising rates and placements with
The merger could also help smaller advertising rivals who might scoop up clients.
Shares of advertising companies rose Monday, the first day of trading after the two giants announced their intent to merge.
“The combined company is likely to lose some clients as a result of the merger,” said DiClemente in a note to clients. “We wouldn't expect the new Publicis Omnicom Group to win all the reviews. This should benefit
The new company, with combined 2012 revenue of $22.7 billion, would make it the world's largest agency with a market value exceeding $35 billion, unseating WPP Plc, which is currently the biggest agency. The two companies announced the all-stock transaction Sunday. Shareholders of each company would hold about 50% of the new entity.
Shares of WWP, Publicis Groupe and Omnicom were little changed Monday.
More consolidation may be on the way.
The merger opens up the possibility of other deals between advertising companies, said Brian Wieser, an analyst at Pivotal Research, who argued Interpublic Group should now be considered an acquisition target, with WPP the most likely buyer.
"Interpublic will immediately be considered to be in play by investors," Wieser said in a research note.
Havas and Japan's Dentsu may also look to do deals, he said, adding that Havas would likely buy a company rather than be acquired.
Omnicom is the parent company of TBWA\Chiat\Day of Los Angeles, which creates advertising for such high-profile accounts as
Publicis Groupe owns such ad firms as Saatchi & Saatchi, which handles advertising for Toyota, and
The merged group will have more than 130,000 employees and be jointly managed by Publicis Groupe Chief Executive Maurice Levy and Omnicom Chief Executive John Wren.
The boards of both firms have approved the merger, which will be subject to numerous regulatory reviews as well as the approvals of shareholders of both companies. The deal is expected to close in 2014.
Los Angeles Times reporter Meg James contributed to this report.
Follow on Twitter: @rfaughnder