• by Steve McClellan  @mp_mcclellan, August 22, 2013

Omnicom Group, its board of Directors and Publicis Groupe were slapped with a third class action law suit in New York State Supreme Court Tuesday that seeks to get the proposed merger undone.

Like the others, the suit, filed by Omnicom shareholder Robert Fultz alleges that the Omnicom board failed to properly look after the best interests of the company’s shareholders by accepting “grossly inadequate” merger terms that favor Publicis Groupe shareholders while Omnicom is contributing significantly more revenue and profits to the merged entity.

Not only are Omnicom shareholders getting a raw deal, Fultz argued, but the merger agreement also makes it virtually impossible for a rival bidder to step up and offer a better deal. Fultz asserted that the current agreement bars Omnicom Group from soliciting richer offers. And if one comes unsolicited over the transom, Publicis must be notified within 24 hours; has full access to the competing offer and 10 days to match it.  Thus, concludes Fultz, “no rival bidder is likely to emerge and act as a stalking horse for Publicis because the Merger Agreement unfairly assures that any negotiating process will favor Publicis.”

In addition to scrapping the merger Fultz said the Court should rule Omnicom accountable to common shareholders for their losses as a result of attempting to push through the unfair agreement. To date that would include nearly $1 billion in lost shareholder value for holders of Omnicom’s outstanding common shares, which are down about $3.65 since the merger was announced.

Omnicom’s standing response to shareholder suits: “Omnicom is aware of the complaint that has been filed in New York state court and we believe very strongly that the claims lack any merit whatsoever.  The filing of lawsuits, like this one, shortly after the announcement of a merger or acquisition -- regardless of the merits of the transaction -- is a common occurrence.”