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Acquisition Of Omnicom Group Inc. By Publicis Groupe SA May Not Be In The Best Interests Of Omnicom Group Shareholders

Stocks in this article: OMC

SAN DIEGO and NEW YORK, July 30, 2013 /PRNewswire/ -- Shareholder rights attorneys at Robbins Arroyo LLP are investigating the acquisition of Omnicom Group Inc. (NYSE: OMC) ("Omnicom") by Publicis Groupe SA ("Publicis").  On July 28, 2013, the two companies announced a definitive merger agreement under which the two companies will combine to become Publicis Omnicom Group.  Under the terms of the agreement, Omnicom shareholders will receive 0.813 newly issued ordinary shares of Publicis Omnicom Group for each Omnicom share they own, together with a special dividend of $2.00 per share, for a total merger consideration of $69.36 per share.  The transaction is expected to close late in the fourth quarter of 2013 or the first quarter of 2014.


Is the Merger Best for Omnicom Shareholders?

Robbins Arroyo LLP's investigation focuses on whether the board of directors at Omnicom is undertaking a fair process to obtain maximum value and adequately compensate its shareholders in the merger.  As an initial matter, several analysts have recently set target prices above the $69.36 merger consideration.  As recently as July 10, 2013, an analyst from JP Morgan set a target price of $75 per share and an analyst from Macquarie Group also set a price of $75 per share on July 19, 2013.  In addition, an analyst from Argus Research Company set a target price of $72 on July 19, 2013.  Moreover, the $69.36 merger consideration represents a premium of only 6.5% based on Omnicom's closing price on July 26, 2013.  That premium is substantially below the average one-day premium of 51.14% for comparable transactions in the past three years.

In addition, on July 18, 2013, Omnicom released its financial results for the second quarter of 2013, reporting a 6.9% increase in diluted net income per common share to $1.09 per share from $1.02 per share compared to the second quarter 2012.  Also, Omnicom has exceeded analyst earnings per share expectations in the past nine quarters and analyst net income expectations in eight of the last nine quarters.

Given these facts, Robbins Arroyo is examining Omnicom's board of directors' decision to be merged with Publicis now rather than allow shareholders to continue to participate in the company's continued success and future growth prospects.   

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