A little over nine months after announcing their merger in late July 2013, competing advertising giants Omnicom Group Inc. and Publicis Groupe SA abandoned their deal. When first announced, many thought that antitrust would be one of the deal's biggest hurdles, yet the parties obtained quick merger clearance from several merger regimes including the US and the European Union. However, China's merger approval remained elusive. On May 8, 2014, the parties reported that the deal suffered from uncertainties that arose during the deal's delay. During a conference call the next day, Omnicom's President and CEO John Wren stated that the parties were unable to agree on management and other key issues and cited to clashes in corporate cultures and significant cross-border tax issues as leading to the deal's demise.

This Update discusses two lessons to be learned in light of the Omnicom and Publicis deal.

As the Omnicom and Publicis deal shows, delays create uncertainty and uncertainty can kill deals. One of the major delaying factors in Omnicom/Publicis was the premerger approval process in China. There are now more than 100 countries with merger review laws and some have hard premerger filing deadlines. Counsel should be prepared to deal with global merger review as early as possible in the deal process and should also:

(See Practice Note, Corporate Transactions and Merger Control: Overview: Multi-jurisdictional Filings.)

If antitrust counsel determine that the merger may have substantive antitrust issues in the US or elsewhere, counsel should begin to work on a merger defense, involving foreign counsel where necessary (see Practice Note, Corporate Transactions and Merger Control: Overview: Advising on the Results of a Preliminary Merger Analysis). For a comparison of various countries' merger control laws, see Competition law: Country Q&A tool.

The collapse of the impending merger between Omnicom and Publicis also serves as a reminder to merging companies that deals can die even after obtaining merger clearance from key countries. Therefore, preclosing sharing of competitively sensitive information and integrating businesses may not be in the parties' best interests, particularly for the seller, its management and shareholders.

The seller typically carries most, if not all, of the risk during the time between announcing the deal and closing, including potential loss of:

This harm may be exacerbated if the seller shared competitively sensitive information and began to integrate its business with the buyer's and the deal is terminated before closing.

The US antitrust laws require transacting parties to remain separate and independent economic actors before closing to:

When merging parties share competitively sensitive information or integrate their businesses before obtaining HSR approval and closing, it is referred to as gun-jumping (see Practice Note, Antitrust Enforcement Actions: Gun-jumping). Antitrust counsel advise transacting parties not to gun-jump before obtaining merger clearance, as the behavior creates great antitrust risk under:

(See Practice Note, Information Exchange and Integration Planning in M&A: Antitrust and Avoiding Gun-jumping in Corporate Transactions Checklist.)

While merging competitors face Section 1 and Section 5 risks even after obtaining HSR clearance, the federal antitrust agencies have never brought an enforcement action solely for improper integration post-HSR clearance (see Practice Note, Antitrust Enforcement Actions: Gun-jumping).

Therefore, the parties' real integration risk after clearing merger review (but before closing) is business related. That business risk increases if the deal is delayed or the parties' are not seeing eye-to-eye on integration planning or other deal issues. Therefore, seller's counsel should advise the seller on both antitrust and business risks of preclosing integration, particularly if the deal is delayed for a substantial period.