Beware of the stampede as raging bulls charge to the front of the herd
Just as this column was hitting the presses last week, I received a tweet from New York about a rumour forecasting the biggest move in advertising in the past decade. By Sunday it was confirmed: the No.2 and No.3 advertising agencies in the world, Omnicom in the US and Publicis in Paris, were to merge to create a $US35 billion ($38.8 billion) monster that would outrank the No.1, WPP, headed by the wily Sir Martin Sorrell.
The new company could control up to 40 per cent of the world advertising market and threaten to run down the rest of the industry like a rampaging bull.
Strangely, the month of July has a long history of celebrating bullish activities.
Every July, for more than 600 years, the walled streets and cobblestoned lanes of Pamplona have hosted the terrifying Running of the Bulls festival. Charlie thinks it reflects on another Wall Street of the modern era. What began simply as a way of getting stock to market, ended up as an international event with high-testosterone members of our species scrambling over themselves to achieve a victory over some perfectly happy four-footed things that didn't even know a race was on.
And apparently the bulls do not cause most of the injuries anyway. Just blokes knocking over other blokes or slipping in the rush.
Perhaps the old phrase "keep your head down" originated here as well, because it is recommended that if you fall, you just stay down and slither towards the nearest crevice, even if there are three people already squeezed in there. Some say it's a way of cementing lasting friendships.
But you have to be made of some unusual stuff to take this on. Like my old mate Trevor Kennedy, who did it in the 1970s with uncompromising former Australian cricket captain Ian Chappell. Actually, both Chappell and Kennedy had been in training for years - Kennedy as the all-powerful right-hand man to Kerry Packer, and Chappell in handling a team of red hot cricketers. I'd rather face a raging Angus than Dennis Lillee any day.
As I have said many times, the world of business mirrors the rest of the world and vice-versa. The formation of the world's biggest advertising agency will be completed by the last quarter of this year or the first quarter of the next one, and it has been argued that it is a way of improving the service to its many, often competing, clients worldwide. While this is still to be proven, what is clear is that it is an excellent way of improving the circumstances of its own top people. I guess clients will come later.
Omnicom chief executive John Wren seems to have a change of control clause in his contract that will be activated by this deal, and most probably Maurice Levy, the CEO of Publicis, is in the same comfy boat. Wren has about a million Omnicom shares worth $US70 million or so, which will translate into a holding of 813,000 in the new company, plus shareholders will get a $2 bonus for each share they own. The shares themselves won't change much in value; after a brief jump they will settle back at their original position. Publicis shareholders seem to be the winners, getting an equal standing with the much bigger US company. They also get a €1 ($1.47) bonus for each share.
July must have been an exciting time for the top people of Omnicom and Publicis as they stampeded over each other to win the deal. But Charlie, our rather sober and pragmatic economic forecaster, can't see it as any more than an adrenaline and cash rush for an elite few.
However, the future might still play out in unexpected ways. When this $US35 billion monster slips on its new costume after they work out who will be the head and who will be the tail, right behind them will be the even bigger Google with about $US55 billion in the bank and no significant debt.
We all wonder what's next. Who will run, who will charge and who will keep their head down?
Perhaps Louise is right - she thinks the running of the bulls is crazy.