M&C Saatchi rejects second takeover bid from its biggest shareholder

M&C Saatchi has rejected a revised takeover offer from its largest shareholder, the tech entrepreneur Vin Murria.

AdvancedAdvT, an acquisition vehicle owned by Murria and backed by investment group Marwyn Investment Management, has said it made a second bid to buy M&C with more generous terms than its first attempt, but that directors of the advertising group had rejected the offer late on Sunday.

What has happened?

  • After its first bid to buy M&C Saatchi was knocked back, AdvancedAdvT offered shareholders a mix of shares and cash, and the chance to retain current chief executive Moray MacLennan.

  • M&C shareholders were offered 2.245 new AdvancedAdvT Limited shares for each M&C Saatchi ordinary share, or a mix of shares and cash – 1.633 new AdvancedAdvT Limited shares and 40 pence in cash for each M&C Saatchi ordinary share.

  • The London creative agency was previously the subject of intense stock market attention when Murria, through AdvanceAdvT, bought a major chunk of the firm two weeks ago.

  • M&C Saatchi confirmed it had rejected the bid. The company's board said in a statement that ”the Revised Proposal and the Alternate Proposal continue to significantly undervalue the Company and its prospects, particularly in light of the continued strong performance, most recently highlighted in the trading update of 21 January 2022 demonstrating the continued successful implementation of the Company's strategy.”

Why might M&C reject the bid?

  • M&C’s independent directors rejected the first bid on the grounds that it didn’t ”reflect the value of the business and its future prospects”.

  • Commentators previously predicted that shareholders wouldn’t agree to an acquisition cheaply. M&C's board stated that ”any proposal whether in new AdvT shares or with part cash should be at identical values.”

  • In addition, M&C's board highlighted several perceived issues with the takeover proposal, including a lack of detail surrounding Murria’s proposals for further M&A, disruption to M&C's everyday operations ”and its ability to continue to retain key employees.”

  • The incumbent directors’ hands will have been strengthened by the closure of a Financial Conduct Authority (FCA) investigation into the business, first begun in January 2020.

  • The FCA said that no enforcement action would be taken, giving the agency a clean bill of health in the long wake of its 2019 accounting scandal.

  • In a statement released on Friday 21 January, M&C’s board predicted strong trading results from the 2021 financial year: ”As a result of a strong end to the year, the Board now believes full year 2021 headline profit before tax will be materially ahead of its previous expectations which gives the Board confidence in its future growth prospects.”

Why is Vin Murria trying to buy M&C Saatchi?

  • Murria, a British tech entrepreneur, indicated previously that she wants to use M&C Saatchi as the anchor for a new digital marketing firm in the same vein as S4 Capital. The investor has past form running software businesses.

  • In its notice regarding the failed bid, AdvancedAdvT suggested the merger would ”provide significant investment and additional expertise to build on the existing M&C platform, seeking to drive M&C’s future growth at significantly greater pace for the benefit of all stakeholders”.

  • That document proposed that while MacLennan would be kept on, a new director would be appointed with responsibility for data, analytics and digital transformation, alongside a new chief financial officer and chief operating officer.

  • Though M&C’s board has rejected the latest deal, it’s unlikely to be the end of the matter; Murria still holds a 22.28% stake in the firm.

This article was updated January 25.