* Shares in WPP, Interpublic, Havas leap on deal news
* Competing agencies will seek to poach big advertisers
* Conflicts possible in tech, telecom, autos
* Publicis, Omnicom say can manage conflict risks (Recasts)
By Kate Holton and Leila Abboud
LONDON/PARIS, July 29 (Reuters) - A plan to merge Publicis and Omnicom into the world's biggestadvertising group has begun a scramble by rivals to poach theirblue-chip clients worried the new agency might face conflicts ofinterest.
Without any defections, the Franco-U.S. giant would bringthe accounts of major competitors in a number of industries suchas Apple and Samsung, or Coca Cola and PepsiCo, under one roof.
Publicis boss Maurice Levy and Omnicom's John Wren spoke tosome of their biggest clients before the $35.1 billion deal wasannounced on Sunday, and made further calls on Monday toreassure them they will be better served by the new group.
But rival chief executives from London to Paris and NewYork, including WPP boss Martin Sorrell, were alreadyscouting on Monday for accounts to poach from the soon to beformed group, industries sources said.
Under the planned deal, the French and U.S. groups will forma giant that will have the necessary scale and investmentfirepower to cope with rapid changes brought by technology onthe advertising business.
Rival ad groups have a rare opportunity to swoop ascontracts between major advertisers and agencies often includeclauses that say they can be renegotiated in the case ofagencies being bought or sold.
"It's good for us and other independents," said DavidKershaw, CEO of ad group M&C Saatchi. "It shakes outmore people that want great creative and global capability butthey don't want to be involved with one of these behemoths, andalso who feel uncomfortable having their competitors within thesame group," he told Reuters.
The merger will bring together Publicis brands such asSaatchi & Saatchi and Omnicom's BBDO Worldwide and DBBWorldwide, which could create new client clashes.
Levy and Wren said they did not expect any major problemswith big advertisers defecting to rivals, with the Frenchmandescribing the reaction from clients as "extremely positive".
"We're going to work extremely hard to resolve any clientconflict issues with creative solutions," said Wren, adding thathe expected only roughly 1 percent revenue losses due topotential contract losses.
Shares in rival ad groups leapt on Monday, in a sign oftheir perceived opportunity and the prospects for furtherconsolidation in the industry.
Shares in WPP, currently the world's biggest ad agency,opened up over 4 percent before settling back to be up 0.6percent at the London close. Interpublic was up 8percent on the New York stock exchange while France's Havas was trading 5 percent higher.
"The deal should boost competitors' stock prices in the nearterm, with billions of overlapping business up for grabs and theindustry consolidation story now having a greater sense ofurgency," said Steve Soranno, an equity analyst at U.S.-basedfirm Calvert Investment Management. It has $13 billion undermanagement, including shares in Omnicom.
MASSIVE SWINGS
Don Elgie, the chief executive of the insight and digitalcommunications group Creston, said he expected to see a fall-outfrom the tie-up.
"Communications groups are nothing without their clients,"he said. "You could see massive swings in terms of clientsmoving around.
"They can't have talked to all their clients (and also) noclient is going to give a cast iron reassurance until they seehow the thing shakes out."
Three senior European advertising executives interviewed byReuters said areas of conflict within the new company couldinclude the consumer goods, tech and automobile sectors.
For example, Omnicom works for PepsiCo and Publicishandles Coca Cola. In telecoms, Omnicom handles U.S.leader AT&T and Publicis its rival Verizon.
Technology blue-chips are also an issue: Omnicom works forApple and Microsoft, Publicis for Samsung and Google.
BMW sales chief Ian Robertson said he had some concerns.
"We may be affected in some way in some country but it's tooearly to say," he told Reuters. "Ideally, clearly we (would)have that independence from other manufacturers. But in a worldwhich is now connected and there are so many mergers of thistype, maybe that's something that is not an ideal position."
Renault and Nissan were amongst the first big advertisers tosay they welcomed the deal.
"Renault and Nissan are both major global clients of bothPublicis and Omnicom. We welcome the direction taken by Publicisand Omnicom to create a best-in-class communications,advertising, marketing and digital services company and willcontinue to work with them," a Nissan spokesman in Britain said.
As the two ad groups begin a round of meetings withshareholders, the one area they are likely to focus on is theadvantage they will get in negotiating the pricing for ads withthe tech giants of Facebook or Google, andinvesting in new software and data mining tools.
"Consolidation may help regain pricing power in a verycompetitive industry," Morgan Stanley analysts wrote. (Additional reporting by Rhys Jones and Paul Sandle in London,Andreas Cremer in Frankfurt and Liana Baker in New York; Editingby David Stamp)
WPP (WPP)
