Cheil Worldwide, Publicis won’t merge

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Cheil Worldwide, Publicis won’t merge

Cheil Worldwide, the advertising arm of Samsung Group, confirmed Monday that talks between its main shareholders and the France-based advertising giant Publicis Groupe about forming a strategic partnership failed to reach a conclusion.

Publicis, the third-biggest player in the global market, also confirmed the discussions were over through The Wall Street Journal on Monday.

“Talks between our main shareholders and the global agency regarding diverse ways of cooperation have come to a split without coming to a detailed conclusion,” Cheil Worldwide said through a regulatory filing on Monday. “Our company no longer has any ongoing meetings with the third party regarding the issue.”

Cheil Worldwide has been in the news since earlier this year, when rumors that a major portion of the company would be acquired by a foreign ad agency - potentially one based in China - first began to spread.

Amid growing investor anxiety, the company released a regulatory filing in February admitting that talks had been taking place, but no details had been confirmed.

Ever since, Cheil Worldwide’s stock price has been on a roller-coaster ride. In May, it plummeted to 15,500 won ($13) per share. But with the uncertainty regarding the company’s future cleared up for the time being, its stock jumped 3.1 percent to close at 16,650 won on Tuesday.

Local analysts are predicting that Cheil Worldwide will remain stable for the near future.

“This regulatory filing seems convincing,” said Hong Se-jong, an analyst at Shinhan Investment. “Aside from Publicis, Cheil Worldwide currently doesn’t have any suitable nominees to consider an additional merger and acquisition. Mid- or long-term uncertainty about selling its parts has been resolved for now.”

Kim Hee-jae, an analyst at Daishin Securities, was similarly optimistic.

“With the acquisition by Publicis gone to ashes, it is unlikely that Cheil Worldwide will carry out an additional merger and acquisition with other agencies or investors,” he said. “At least for the rest of the year, Cheil Worldwide will need to be evaluated solely based on its performance.”

Cheil Worldwide is one of Korea’s top advertisement agencies and is closely affiliated with Samsung Group. Its largest shareholder is Samsung C&T, the de facto holding company of Korea’s No.1 conglomerate with a 12.64 percent stake, followed by Samsung Electronics (12.6 percent) and Samsung Card (3.04 percent).

Largely because of that affiliation, the agency has been generating stable operating profits, posting 126.8 billion won in 2014 and 127.2 billion won in 2015.

Despite its domestic successes, the company has long been looking for a way to break into foreign markets because of the competitiveness and saturation of the Korean market.

“We were looking for partners that have know-how in the foreign market,” said Lee Sang-hyun, a senior manager on the public relations team at Samsung C&T.

“Publicis was known to have built up its ground especially in the European market, which is why we considered them as partners despite several requests from other agencies,” Lee added.

Even though the acquisition failed, Publicis said it will continue its strong relationship with Cheil Worldwide.

“The strategic relationship with Samsung is as strong as ever and we will continue to work daily with Samsung and Cheil Worldwide to make the brand even more successful,” Publicis was quoted as saying by The Wall Street Journal.

A Cheil Worldwide spokesperson said it will focus on developing the company’s competitiveness in the local market.


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