NEW YORK (TheStreet) -- The failure of the $35 billion merger of equals between Omnicom (OMC) and Publicis may prove to be a good thing for Omnicom shareholders.
The breakup of similarly large and complex transnational mergers, for instance French aviation giant Airbus's now-cancelled merger effort with BAE Aerospace (BAESY), have proven an opportunity for investors as embarrassed c-suites rededicate to shareholder returns and prudent corporate investment.
Signs already indicate that Omnicom may be moving in a positive direction just hours after announcing it had ended its nine-month long merger effort with Publicis, a highly embarrassing move to be sure.
Omnicom had suspended planned share repurchases after announcing the proposes tie-up with Paris-based Publicis in July 2013.
"We now have some catching up to do," CEO John Wren said of Omnicom's share buyback activity on a conference call with the media and investors Friday. In the wake of Omnicom's July merger announcement, the company accrued over $1 billion in its corporate bank account. Expect that cash to be returned to shareholders by way of share repurchases as soon as next week.
Commentary also indicates Omnicom may try to give shareholders a little extra, an unsurprising move in the wake of Friday's merger fallout. The company appears willing to stretch buybacks to whatever its investment grade credit ratings can handle.
Omnicom believes it can raise about $1 billion in debt to finance buybacks, adding to share repurchases conducted with the $1.2 billion that's swelled to the company's bank account since the third quarter of 2013.