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April 25 (Reuters) - A merger of Omnicom Group Inc,the No.1 U.S. advertising company, and French rival PublicisGroupe SA has hit a roadblock following disagreementsover terms of the deal, the Wall Street Journal reported Friday,citing people with knowledge of the situation.
Last July, both companies announced the proposed $35 billionmerger that would overtake WPP Plc as the world'slargest advertising company.
The companies have essentially not agreed on who will be thelegal acquirer, which is delaying crucial paperwork with theU.S. Securities and Exchange Commission, according to thereport.
Despite both companies owning 50 percent of the new entity,technically one has to acquire the other for accounting reasons.
Omnicom and Publicis have stopped meetings of about 70integration committees, where they present their networks,teams, organization, the Journal said, citing sources. (http://link.reuters.com/nax78v)
The companies are also unable to agree on the filling ofsenior posts in the to-be-created advertising behemoth,particularly the position of chief financial officer.
Omnicom wants its finance chief Randall Weisenburger to bethe new CFO of the merged entity, while Publicis is backing CFOJean-Michel Etienne for the job, the Journal reported.
Omnicom and Publicis could not be reached for commentoutside regular business hours in the United States and France.
The instability surrounding the merger has benefited rivalWPP, which posted a much better-than-expected first-quarterrevenue growth on Friday, helped by a surge in new clientslinked to the merger.
"I think the best result for us, frankly, would be for thedeal to go ahead with joint CEOs, you know, fighting with oneanother about who's running the company," WPP chief MartinSorrell said in a Reuters Insider interview following theresults. (Reuters Insider: http://r.reuters.com/qax78v)
Sorrell said that people he spoke with have said there's athird to 50 percent probability that the deal will not gothrough.
Legal and tax issues are also adding to the conflictsrelated to the merger. Omnicom on Tuesday said it was unable topredict when the deal would close, following uncertainty overapproval from antitrust authorities in China, a big market forPublicis, and for establishing tax residency in the UnitedKingdom.
Both companies will have to get approvals from the revenueand customs authority in the United Kingdom and the financeministry of the Netherlands, where the new British company willbe headquartered.
Tax approval from France is also pending, Omnicom has said. (Reporting by Sampad Patnaik and Aman Shah in Bangalore;Editing by Lisa Shumaker)
