Tensions are growing high at Cheil Worldwide, the advertising unit of Samsung Group that has been widely rumored to be merging with French ad giant Publicis Groupe within the first half of this year.
According to industry sources, Cheil has continued talks to sell off a controlling 28.28 percent stake that is owned by Samsung C&T, Samsung Electronics and Samsung Card to Publicis.
Even though the company has not yet confirmed the deal, a sense of anxiety is already prevalent among Cheil workers. Currently, some 6,000 people work at Cheil, including 1,300 in Korea and 4,700 overseas.
"Most of the workers think a sizeable layoff would be unavoidable," a Cheil copywriter said on condition of anonymity. “Especially senior workers and those working for nonproduction teams feel more pressure.”
For instance, he said, Cheil has poured resources into winning prizes at international ad festivals such as in Cannes to elevate its brand awareness. But the related team is likely to be dissolved after the merger with Publicis, one of the world’s top three ad companies, according to him.
“Nonproduction team members could be dispatched to other Samsung companies. Even copywriters have started seeking a job in fear of any disadvantages compared to those from Publicis,” he said.
The possible merger plan comes as Samsung Group is speeding up business restructuring based on two main pillars -- technology and finance. As part of the efforts, the group has abandoned less profitable businesses such as chemicals and defense.
Sources say Cheil and Publicis are fine-tuning detailed deal conditions, including the latter’s demand for a five-year guarantee of orders from Samsung Electronics, one of the biggest ad spenders across industries.
“Publicis’ key interest is securing more orders from Samsung Electronics. But a five-year guarantee seems tricky for Samsung to accept considering it has gradually reduced orders for Cheil,” said another source declining to be named.
Samsung has increasingly selected an ad agency through public bidding rather than depending on its in-house firm. When it comes to its global marketing and ad campaigns, it has preferred a global ad company.
In the meantime, Cheil has also tried to diversify clients by setting up overseas branches in recent years, but their reception has largely remained lukewarm.
The source predicted it could take more time to finalize the deal, including talks for employment succession.
Along with more Samsung orders, Publicis is eying Cheil’s sales network in China, where it has almost no presence.
By Lee Ji-yoon (
jylee@heraldcorp.com)
