Omnicom unable to say when Publicis merger will close

Chief executive says there ‘is no plan B’ regarding tax approvals

The number one US advertising company Omnicom says it is unable to predict when its $35.1 billion merger with France’s Publicis Groupe will close, as the deal has yet to win some key approvals. Omnicom’s shares fell as much as 3.6 per cent in early trade yesterday. “At this point it’s not practical to predict exactly when the transaction will close,” chief executive John Wren said after the company reported better-than-expected quarterly revenue yesterday.

Omnicom, which in October expected the merger to close in early 2014, said in February the deal was likely to close “a little bit into the third quarter”. It also said it was yet to receive approval from anti-trust authorities in China and for establishing tax residency in the United Kingdom.

Mr Wren said if the companies were unable to obtain the tax residency approvals, “it could affect the likelihood of satisfaction of the conditions to closing of our deal”. Any major tax implication for investors could be a potential deal breaker as both companies are trying to make the merger tax-free for their shareholders, Edward Jones analyst Robin Diedrich said. “I think there’s definitely some additional doubt cast on the deal getting done.”

The tax residency will have to be approved by the revenue and customs authority in the United Kingdom and the finance ministry of the Netherlands, where the new company will be headquartered. Tax approval from France was also pending, the company said. “With respect to a number of items [for receiving tax approvals] . . . there is no plan B. Those things are requirements to get to a closing,” Mr Wren added. – (Reuters)