Advertising titans Omnicom and Publicis called off their $35 billion merger Friday, the deal bedeviled by corporate culture differences, regulatory issues and who would hold power in the combined firm.
After nine months of talks between the US and French companies on creating the world's largest advertising agency, the two sides said there were too many issues to surmount "within a reasonable timeframe", including tax and regulatory challenges.
But, despite what appeared to be a harmonious start to what was labeled a "merger of equals", there were signs of differences at the top over who would control the combined company.
Publicis chief executive Maurice Levy said the merger was a great idea that would have created a formidable operation if it had worked.
However, he added, "It is not a merger of equals if you have a CEO, CFO and general counsel only from one side."
The companies had difficulties "building a good balance" between executives from the two, Levy said.
chief executives "We felt a great risk of a dilution of Publicis's model," he added.
"We knew there would be differences in the corporate cultures of Omnicom and Publicis. That is to be expected when strong management teams are coming together," said Omnicom CEO John Wren
"But I know now that we had underestimated the depth of these differences."
The work on the merger, which apparently failed to settle a necessary accounting and structural formality of which company would buy the other, had become a distraction from day-to-day business as well.
"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," the two companies said in a statement.
- Clash of CEOs -
The merged company would have been the world's biggest in advertising, with 130,000 employees and revenue of more than $28 billion (20 billion euros).
Omnicom, the world's second-largest advertising company after Britain's WPP, controls several top advertising brands, including advertising agency networks BBDO Worldwide and DDB Worldwide.
Publicis, number three, includes Leo Burnett and Saatchi & Saatchi.
In 2013, Omnicom saw profits of $966 million, down one percent from 2012. Publicis posted record profits of 816 million euros, an increase of 11.5 percent from the previous year.
WPP chief executive Martin Sorrell told AFP that the primary problem was "the clash of two strong-willed CEOs who, prior to the announcement, announced they could work together -- and we all know that mergers of equals don't work."
"It's a bit difficult to justify why they took 10 months to find out that they couldn't get together and spend a couple of hundred millions dollars finding out."
But Publicis's Levy pointed as well to other fundamental challenges to the merger, including a changing environment for transatlantic mergers and acquisitions.
"The circumstances changed in the last nine months in the EU. The tax environment has become politically charged, especially for US-European mergers," he said.
"I think it's going to be a very long time before I try to make a merger of equals again."
On the Paris exchange, Publicis shares finished down 0.8 percent at 60.20 euros after the news. In New York, Omnicom was up 0.8 percent to $66.75 at midday.
Levy, 72, told AFP he intends to stay on as the head of Publicis until his mandate expires at the end of 2015.
"I don't feel weakened" by the collapse of the merger "even if I am extremely disappointed."
Levy, who has headed Publicis since 1987, said he had the support of the company's board and was extremely happy with the team at the company.
"If I had thought I had done something poorly, I could have decided to leave," he added.