M&C Saatchi resists takeover bid by non-executive director Vin Murria

share on

twitter /
facebook /
linkedin /
- email
- telegram
- whatsapp
- wechat
- pinterest
- line
- snapchat
- reddit

M&C Saatchi appears to be pushing back at a potential share exchange merger between the agency and AdvancedAdvT (AdvT), an acquisition vehicle chaired by Vin Murria who is also the non-executive director of M&C Saatchi. AdvT had acquired 12,000,000 ordinary shares in M&C Saatchi on 5 January and stated on 7 January in a London Stock Exchange filing that it is interested in exploring a share exchange merger.

AdvT explained in the filing that the merger “would create an opportunity to build a data, analytics and digitally focussed creative marketing business with a strong balance sheet and additional management expertise in transforming businesses at pace and execute on complementary M&A”.

“This would allow the enlarged group to continue its evolution and, crucially, accelerate the implementation of its growth strategy and therefore be increasingly relevant to its customers,” the company said. At the same time, the merger would also enable the enlarged group to capitalise on the heightened opportunity to “navigate, create and lead meaningful change” whilst guiding companies on their new digital journey.

AdvT also said that the merger would enable M&C Saatchi to resolve the legacy put option issue as well as providing the cash to accelerate investment in the business and transformational digital led M&A.

“It would defend M&C Saatchi's traditional creative base against disruptive competitors and enable the enlarged group to grow market share against its peers,”AdvT added.

“We see a significant opportunity for the enlarged group, with an accelerated data, analytics and digital strategy and combined stewardship, to achieve similar valuation multiples, improve the liquidity of the shares, implement a progressive re-instatement of the dividend policy which we believe will enhance the business' attractiveness to investors,” the company said.

As part of the proposal, AdvT would offer each M&C Saatchi shareholder 1.86 new AdvT shares for each M&C Saatchi ordinary share.

However, M&C Saatchi was not convinced and said in a London Stock Exchange filing that the share proposal “does not articulate an alternative strategy for the benefit of the company’s stakeholders beyond an initial change of control of M&C Saatchi”.

“Furthermore, the proposal does not reflect the value of the business and its future prospects and would disproportionately transfer equity value from M&C Saatchi shareholders to AdvT shareholders,” the agency said.

It added that its current strategy has been in place since the first quarter of 2021, and has resulted in a number of positive trading updates. Meaningful new client wins include Uber, Google, Tiktok and Tinder as well as new assignments from existing clients including the UK Government, Pepsico, Reckitt and Lexus.

“It is not clear to the Independent Directors how shareholders and other stakeholders would benefit from ownership dilution and a change in board leadership of the company,” M&C Saatchi said. It added that there can be no certainty that an offer will be made, nor as to the terms on which any offer might be made.

M&C Saatchi posted gross revenue of about US$232.2 million during the first half of 2021, up 14.7% on H1 2020. It also amassed net revenue of about US$160.2 million, up 14.2%. Headline operating profit margin increased to 10.5%, up 6.4 points compared to H1 2020. Meanwhile, the agency also touted accelerated digitalisation and data integration across all disciplines and the successful launch of its data consultancy, Fluency.

Photo courtesy: 123RF

share on