Omnicom closes $100m Communispace deal

Silence reigns at Omnicom Towers on its mooted $100m deal with eCRM and insight company Communispace. Which is odd, for two reasons. First, it is the biggest deal engineered by the marketing services juggernaut since its ill-fated acquisitions of Agency.com and the somewhat more successful Organic in 2003. Second, and rather crucially – I hear the deal has gone through.

At all events, Communispace founder, president, chief executive and 10% shareholder Diane Hessan is packing her bags (now presumably heavy with loot).

The question is, what happens now? In an earlier post, I pointed out that $100m is a very steep price – yet, curiously, it does not seem to have been a stumbling block for that wily operator John Wren, Omnicom president and chief executive officer.

At the time I concentrated on the financials, and speculated that there must be something very special about this deal for Omnicom to hazard such an over-priced acquisition. That logic can be applied with equal relevance to Communispace’s clients. True, there are many the two parties have in common, plus a few that Omnicom would like to lay hands on. Yet it’s hard to ignore the conspicuous conflicts. Not just on the brand side, either. A slug of Communispace’s business flows from Omnicom’s rival agencies. Here’s an excerpt from AdAge that neatly summarises the conflict dilemma:

One reason why an Omnicom deal would make sense? Communispace lists as its clients several marketers that work with agencies under the holding company’s banner, including HP, PepsiCo, FedEx, Kraft and Campbell. But the Communispace client list also includes agencies at rival holding companies, like Havas’ EuroRSCG, Publicis Groupe’s Starcom MediaVest Group and Interpublic Group of Cos.’ Martin Agency. Were an Omnicom deal to happen, such alliances would likely have to dissolve, as would accounts with clients like Verizon, a major competitor to a big Omnicom client, AT&T.

I’d add WPP’s Ogilvy to the list of competitors as well (check out Jim Edwards at BNET on this one).

How does Wren plan to steer himself around that one? His last experience with a major acquisition, controversially managed through off-balance-sheet vehicle Seneca Investments, was not a happy one. Let’s hope history does not repeat itself.