Saatchi deal to fuel media rejig

Talks are expected to begin over a merger between Optimedia and Zenith following Publicis’ £1.3bn takeover of Saatchi & Saatchi.

The Publicis deal includes Saatchi’s 50 per cent stake in Zenith, which is a joint venture with Cordiant.

Zenith’s management did not take part in the takeover talks but discussions are now expected to begin on a possible merger with Publicis-owned Optimedia.

The Saatchi deal creates the world’s fifth-largest advertising group, with worldwide billings of £6.3bn, and is expected to trigger a further wave of agency consolidation, with True North, Grey and Cordiant likely targets for mergers.

Saatchi shareholders will have a 30 per cent stake in the new company, which will be called Publicis Groupe SA.

The deal comes despite assurances by Saatchi chief executive Kevin Roberts just three months ago that it would continue to stand alone.

One insider at Saatchi says: “Everyone recognised that we couldn’t bumble along forever. We have been very patchy across Europe but this deal will strengthen our coverage and put us into second place on the Continent.”

Saatchi is understood to have been under pressure from core client Procter & Gamble to increase its size by seeking a merger.

Talks with fellow P&G roster agency Grey are believed to have broken down last year over the issue of control.

Publicis chairman Maurice Levy stepped into the breach after failing to land Young & Rubicam earlier this year. P&G is understood to have given its blessing to the merger by waiving any objection to conflict with Publicis’ client L’Oréal.

The deal gives Levy a major presence in the US market, which is expected to make up 38 per cent of the new group’s turnover.

It also makes Publicis larger than rival Havas in its home French market – which could bounce Havas into making further acquisitions, according to some observers.

One industry insider says: “This deal isn’t about fit, it is all about scale and appearing to be a major player. Maurice Levy doesn’t have a grand plan other than to be grand.”

The two agency networks will continue to operate independently, sidestepping a possible conflict between Publicis’ Renault and Saatchi’s Toyota business.

Some observers expected problems to arise out of M&C Saatchi’s use of the Publicis network for parts of its British Airways business.

An industry insider told Marketing Week:: “The two Maurices (Levy and Saatchi) had a chat about it and worked things out. They get on well together.

“I think Maurice Saatchi is quite amused by the fact that his old company is now just a subsidiary of a French-owned company.

“The company he has left behind is now just a secondary brand for someone else.”