M&C Saatchi acquisition battle: here’s what we know so far

M&C is an international agency group with offices in the US, Asia Pacific and across Europe, which employs around 3,000 staff worldwide.

Prospective buyer AdvancedAdvTV, an investment vehicle owned by British entrepreneur Vin Murria, competed against a rival offer from agency group Next Fifteen to take over the company. Eventually, ADV’s final offer to M&C shareholders was rejected after the company failed to gather enough support. ext Fifteen's competing bid received the same treatment at the close of October.

• Why investors see M&C Saatchi as the linchpin of a new data and digital agency empire

Here, we chart the twists and turns between January and October – and the events leading up to the battle.

October 2022

ADV’s nine-month long pursuit of M&C came to an end on the final day of September, when shareholders voted to ignore its proposals for the agency group.

AdvancedAdvTV, the investment vehicle chaired by British tech entrepreneur Vin Murria, had until 1pm on September 30 to gather the support of M&C shareholders by putting in place agreements to buy their shares in the company and the associated voting rights.

By the deadline, however, its existing holdings (25.6%) plus secured agreements only amounted to 35.4% of M&C Saatchi shares – considerably short of the number required to instigate a takeover. The offer then formally lapsed.

ADV’s statement however, suggested it wasn’t quite finished with M&C Saatchi just yet. ”ADV believes changes are still required in order to unlock and accelerate the realization of the wider potential of the M&C Saatchi business and people,” it read.

Having seen off one would-be buyer, M&C announced the next shareholder vote – on whether the company should remain independent or sell to Next Fifteen. The former is the most likely outcome, after the agency group conceded a likely defeat ahead of the October 31 deadline.

Next Fifteen released a statement to the market that suggested it expects to lose the upcoming vote. It said that the firm expects Murria and ADV to block the proposal, though shareholders may also be unimpressed by NFC’s own recent results – which included significant loss.

The company’s assumptions turned out to be correct: Next Fifteen’s bid was turned down by shareholders, leaving M&C independent for the forseeable.

September 2022

With a conclusion to the buyout saga on the horizon, each of the three parties attempted to sway shareholders to their banner. In M&C’s results for the first half of 2022, chairman MacLennan said the company had spent £9.5m ($10.9m) fending off the bids. Underscoring the problems caused by the ”distraction of a hostile takeover,” MacLennan said the battle had eaten into the firm‘s profits, despite a strong six months in business.

ADV released an ’accelaration statement’ in the second week of the month, appealing to shareholders to hurry up and back its proposal for the company – with a deadline of September 30.

The notice told shareholders that they ”have a clear choice with ADV’s Final Offer providing higher value and greater deliverability within a shorter timetable than Next Fifteen’s final offer... the ADV board believes that its proposals have greater potential than both NFC and the status quo to deliver faster growth and significant value creation for M&C Saatchi shareholders and employees.”

In response, M&C’s board issued two statements of its own, calling the ADV offer ’derisory’ and advising shareholdes to back off. In its second notice, the board highlighted its ”clear plan” and ”proven resilience”. The proposal, they said, carried a ”high risk of damaging culture, triggering a talent exodus, revenue loss and value destruction.”

August 2022

A vote on both proposals was originally slated for August 19, but was postponed to allow Next Fifteen‘s offer to pass regulatory hurdles; ADV confirmed on August 15 that it had passed those obsctacles for its own final offer.

A spokesperson for ADV said ”although Next Fifteen is a credible buyer... its offer price does not reflect the value of foregoing control and the significant synergies available to NFC. Based on the current implied value of NFC’s offer, ADV and Vin Murria intend to vote their shareholdings in M&C Saatchi against NFC’s scheme.”

June 2022

Although terms between NFC and M&C had been agreed, they weren’t finalized. NFC’s own share price fell in the weeks following its bid, leading to Murria and AdvancedAdvT arguing that the proposal should be rejected. “The board of M&C Saatchi continues to recommend NFC’s offer, which as of June 1 2022 offered lower value, yet described AdvancedAdvT’s final offer as ‘derisory,’” AdvancedAdvT claimed in a statement.

“AdvancedAdvT continues to believe that NFC’s current offer for M&C Saatchi does not fairly reflect the potential to unlock significant synergies for M&C Saatchi shareholders as a whole.”

The next day (June 7), M&C shareholder Artisan Partners International, which owns just over 1% of the company’s shares, publicly sided with Murria’s team. The fund’s manager, Anand Vasagiri, wrote to M&C non-executive chairman Davis suggesting that "simply, we feel [NFC’s] cash and share offer is too low” and that "we believe other M&C shareholders may hold views similar to ours.”

By the end of that week, NFC itself issued a rebuttal to those claims – and stated that its offer to take over M&C was final. Dyson said: “We reached agreement with the board and executive team of M&C Saatchi after extensive negotiation and believe our offer is full and fair; we do not believe that the recent market volatility undermines the fundamental proposition of this transaction.”

On June 14, Murria and AdvancedAdvT released what they said would be their final offer for M&C – challenging its board to choose outright between the two proposals – combined share and cash deal, which valued M&C shares at 209.4p.

Murria said in a statement emailed to The Drum: “M&C Saatchi shareholders now have the choice to accept our higher offer, benefiting from owning more than 53.7% of an enlarged M&C Saatchi/ADV group, or a smaller 13.5% of an enlarged Next Fifteen Communications business (excluding ADV and myself) providing them with the opportunity to have majority ownership of a well-capitalized and high-performing group.

“We have significant cash and an advanced pipeline of accretive acquisitions for M&C Saatchi. Our final offer has greater potential to deliver shareholders and employees faster growth and significant value creation,” she wrote. ”We believe our proposition offers a greater number of compelling benefits for M&C Saatchi shareholders, in which we hold a 22.3% stake.”

A week later, M&C’s board revoked its support for the Next Fifteen deal. Although the group was still its preferred acquistion partner, its sliding share price made the offer financially unattractive. M&C Saatchi directors said they “no longer consider the terms of the Next Fifteen offer to be fair and reasonable solely on the basis of the deterioration in value of Next Fifteen.”

To dissuade its shareholders from siding with Murria, the board released an extensive document detailing their opposition to her deal – and revived an ancient Conservative campaign poster for its front cover. We examined why they went to those lengths in our coverage, but the moment brought the battle back to the attention of the British business press.

May 2022

Another bid from Murria, this time directed toward the company’s shareholders, might have brought the deal home. She claimed to have secured written support from 20% of shareholders in addition to her own 22% stake, placing her on the cusp of forcing through a sale that valued M&C at 207.5p ($2.55) per share – a 29.7% premium on the original pre-approach price, which valued the company in total at £254m ($317m).

Three days later, however, Murria was gazumped by agency group Next Fifteen Communications (NFC), itself fresh from the acquisition of large indie agency Engine. Its offer – a cash-and-shares proposal – valued the business at $390m (£310.1m), significantly more than Murria’s bid.

The proposal gained unanimous approval from M&C’s independent directors. Gareth Davis, chairman of M&C Saatchi, said: “The M&C Saatchi independent directors all consider Next Fifteen’s offer to be far superior to the offer announced earlier this week by ADV, and a clear repudiation of ADV’s response statement that it strongly disagreed its bid undervalued M&C Saatchi.”

Furthermore, the prospect of combining the two agency groups proved a sway factor for the board. Tim Dyson, chief executive of Next Fifteen, said: “M&C Saatchi is synonymous with creativity and strategy, whereas Next Fifteen has built a reputation around its technology and data-driven offering.”

Murria, meanwhile, was removed from M&C’s board after its directors decided it was inappropriate for her to stick around.

February 2022

Murria’s third tilt was rejected by the M&C board, its members judging that the offer “continues to undervalue the company and its prospects and would therefore not be recommendable.”

Murria’s combined 22% stake in the firm continued to pose a problem for M&C, however, and the board committed to further negotiations, and pushed the ‘put up or shut up’ deadline back several times, allowing Murria time to raise further funds and revise her bid. But over the next three months, those negotiations didn’t go anywhere.

January 2022

In the first week of the year, AdvancedAdvT Ltd, an investment vehicle chaired by British tech entrepreneur Vin Murria, bought up 9.8% of M&C’s shares, then still relatively cheap following the accounting snafu. When added to Murria’s own stake in M&C, equal to 12.5%, they controlled around 22% of its shares.

On 7 January, Murria and AdvancedAdvT released a statement confirming their interest in acquiring M&C. The markets were abuzz with expectation ahead of an offer, and M&C’s share prices shot up.

Murria’s cash and stocks offer came linked to a proposal to use M&C as the base of a new digital marketing empire, built in the image of Accenture or MSQ, that could grow through bolt-on acquisitions. ”M&C has been a highly creative business... but what they haven’t been known for is a really strong data business. If you think about WPP and Accenture who've made big acquisitions in that space over the last few years, M&C hasn’t got anything in that league,” Murria said. ”Other digital marketing groups have been successful in using M&A to acquire digital capability. 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.”

But M&C’s independent board didn’t agree. It refused two offers in January alone, alleging that the cash and stocks combination “significantly undervalues” M&C and its prospects. After market observers found Murria’s offer wanting, AdvancedAdvT’s own share price began to slip in January too, further undermining its offer (which was partially based on a share-for-share swap – a deal that’s only attractive if the acquirer has a strong share price).

September 2021

Faced with both the impact of Covid-19 and the fallout of the accounting scandal, M&C had a tough couple of years. By the summer of 2021, however, the business was in the clear. That autumn, chief executive officer Moray MacLennan hailed a “key turning point” for the firm when it returned to growth. The launch of new ventures, investment in digital infrastructure behind the scenes, and retention of key clients, such as Reckitt Benckiser and Lexus, helped.

August 2019

Three years ago, M&C Saatchi was rocked by millions of pounds in charges caused by accounting issues around its annual results. The firm revealed it had counted outstanding fees as revenues and included assets no longer used on its balance sheet, owing to a “misapplication of accounting policies”. Consequently, a one-off charge of £6.4m was levied, and its share price fell by over 20%.

By December, that share price had dropped even further – from about £4 (about $5) to just 103p ($1.27) per share. Founder Maurice Saatchi quit, followed by board members Lord Dobbs, Sir Michael Peat and Lorna Tilbian.

This article was first published June 10.