The newly combined agency, Publicis Omnicom Group, would have a stock market value of $35.1 billion and 130,000 employees worldwide.
Publicis, based in Paris, and Omnicom (OMC), based in New York, together brought in revenue totaling $22.7 billion last year.
Chief executives Maurice Lévy of Publicis and John Wren of Omnicom will act as co-CEOs for the next 30 months, after which Lévy will become non-executive chairman and Wren the CEO.
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Shareholders will each hold about 50% of the equity of the agency, which is expected to be listed on the NYSE and Euronext Paris under the symbol OMC. It will be traded on the S&P 500 and CAC 40.
Publicis Groupe shareholders will receive one newly-issued ordinary share of the agency for each Pubicis share they already own, with a special dividend of €1.00 per share.
Omnicom shareholders will get .813 newly-issued shares, with a special dividend of $2 per share.
The transaction is subject to approval by shareholders of both companies as well as government regulators. It is expected to close in the fourth quarter of 2013 or the first quarter of 2014.