FORTUNE — It started as a joke on a rooftop in Paris and ended as an M&A tragedy.
The $35 billion plan to merge Publicis and Omnicom, announced last July, is one of the biggest deals ever to unravel at the seams before the seams even got stitched. A clash of CEO egos, more than any tax snarls or regulatory issues, spoiled this engagement that would have created the world’s largest ad conglomerate.
Publicis (PUBGY) CEO Maurice Levy is the man who proposed the intended “marriage of equals.” As he told me in an interview last July, he had hosted Wren, the longtime chief of rival Omnicom (OMC), on Publicis’s rooftop terrace overlooking the Arc de Triomphe, in January 2013. “This is priceless.” Wren remarked as he scanned the magnificent view. “Not so much,” Levy replied coyly. “It can be yours.”
Levy meant his comment to Wren as a joke, but in the next six months, the two ad titans visited one another nearly every other weekend, meeting in hotels in both Paris and Manhattan and finally sealing their engagement in a secret meeting in the Carlton Hotel during the Cannes Lions international advertising festival on the French Riviera.
The marriage looked beautiful on paper. It would have united Publicis, which owns Saatchi & Saatchi and Leo Burnett as well as Internet-marketing agency Digitas, with Omnicom, which owns ad giants BBDO, DDB, and TBWA, and created enormous leverage with media companies and unmatched clout with Google (GOOG) and Facebook (FB), which are both customers and competitors of the ad companies.
Client conflicts figured to be the main complication: PepsiCo (PEP) is one of Omnicom’s flagship clients, while Publicis serves Coca-Cola (KO). The combined Publicis-Omnicom would have had as clients Apple (AAPL) and Samsung (SSNLF), Verizon (VZ) and AT&T (T), and several major automakers.
But personality conflicts — and the all-too-frequent failure of the co-CEO structure—is what really ruined the plan to combine. “We knew there would be differences in the corporate cultures,” said Wren in a Friday morning call with investors. “We underestimated the depth of the differences,” he said, adding that this “made it difficult to make major operating decisions.”
Wren and Levy’s original plan was to serve as co-CEOs of the new company for 30 months. But they failed to work out details of their power structure and argued over who would be the new company’s chief financial officer. In an interview with Fortune this morning, Levy said that he tried to save the deal by visiting Wren in his New York office on April 11 and telling him, “I’m willing to step out of the CEO role and become chairman right away.” He proposed two options: Wren could be CEO immediately if Wren agreed to a setup with Levy as chairman and Publicis CFO Jean-Michel Etienne as finance chief. Or Levy could be CEO, with Wren as chairman and Omnicom finance chief Randy Weisenburger as CFO. How did Wren respond to Levy’s offer? “He said he would think about it,” Levy recalls.
A meeting of the minds never happened. “It’s better to do what we did rather than enter a bad marriage,” said Wren about their plan to stay independent, sounding relieved. If he were to summarize the deal’s problems in a Tweet, Wren said, he would write, “’Corporate culture, complexity and time’ — and I’d still have 100 characters left.”
“I don’t Tweet,” replied Levy when I asked him how he would sum up the deal’s problems via Twitter (TWTR). Levy couldn’t resist adding two words to Wren’s tally: “Principles and equality,” he said. “If it doesn’t generate equality, it’s not a merger of equals.”
Time squandered on the marriage arrangement left Levy “out of focus on the daily business,” the Publicis chief admits. “I’m back with the ambition of doing a great job and bringing Publicis back to the forefront of positive news.” He has no interest in chasing another big merger prospect. “I want reasonable acquisitions that you can integrate immediately,” he says, noting that he’s seeking “tech and big data” companies that cost less than $1 billion.
Wren too is turned off of big deals. “I think it’ll be a very long time before I seek a merger of equals again,” the Omnicom boss said this morning.
For now, the spoils go to Sir Martin Sorrell, whose British-based WPP Group (IPG), which owns ad agencies McCann Erickson and Lowe & Partners and PR firms Weber Shandwick and Rogers & Cowan. “The natural to buy IPG would be Dentsu,” Sorrell says, referring to the Tokyo-based ad conglomerate. No matter, even if a an IPG-Dentsu deal comes to pass, Sorrell remains king of the industry. With Publicis-Omnicom dead, WPP is once again solidly the biggest ad conglomerate on the planet.