M&C Saatchi board reverses support for Next Fifteen takeover bid
The board of directors at agency group M&C Saatchi has dramatically gone cold on its recommended takeover bid from British holding company Next Fifteen Communications (NFC). A statement released this morning (June 17) said they no longer found the terms of the deal “fair and reasonable” given a deterioration in the share price of Next Fifteen.
The M&C Saatchi board said they no longer found the terms of the deal ‘fair and reasonable’
On May 20, the board formally recommended an acquisition deal with Next Fifteen to shareholders in the agency group. M&C has been the focus of a protracted acquisition battle between tech entrepreneur Vin Murria and Next Fifteen for over six months.
But in a statement released today, 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.”
Next Fifteen’s original offer, a combination of cash and shares in a post-merger NFC, valued M&C shares at 247.2p each. But its own share price has slipped in the weeks since that offer, meaning terms of the deal now value each share at 189p. Despite protests by Murria – who pointed out last week that her own bid for M&C valued shares higher than NFC’s – the group declined an opportunity to revise its offer upwards.
“Accordingly, the M&C Saatchi directors unanimously recommend that M&C Saatchi shareholders do not vote in favor of the scheme at the M&C Saatchi court meeting, nor in favor of the special resolution to be proposed at the M&C Saatchi general meeting,” the statement said.
The change in policy doesn’t mean M&C is now suddenly set to accept the advances of Murria. The directors stated their intention to reject outright the latest, final bid from Murria and her backer AdvancedAdv Ltd.
The directors’ statement suggests it favors a deal with NFC, if terms can be agreed upon. “Based solely on financial terms, the M&C Saatchi directors consider each of the ADV offer and Next Fifteen offer to be inferior to M&C Saatchi’s standalone prospects,” it read.
“However, if those standalone prospects were incapable of being delivered as envisaged, then the M&C Saatchi directors consider the Next Fifteen offer to be superior to the ADV offer and Next Fifteen to be the preferred future owner of the M&C Saatchi business for the reasons including the strategic, commercial, employee and cultural advantages, which the M&C Saatchi directors consider Next Fifteen to offer the M&C Saatchi business.”
NFC's board responded in a statement, saying they were ”disappointed by this decision but welcomes the continued strong support of the M&C Saatchi Directors and M&C Saatchi's executive committee for the strategic, commercial, employee and cultural merits of the Next 15 Acquisition.”
Tim Dyson, chief executive officer of NFC, added: ”We remain firmly of the belief that M&C Saatchi plus Next 15 is a great combination. It will bring together two highly complementary businesses, creating a truly global and diversified group with exceptional capabilities, clients and talent. We are confident we can accelerate the ambitions of both businesses, creating significant value for our clients, our people and all the shareholders in the Enlarged Group.
”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.
”The board of M&C Saatchi has set out very clearly the reasons why it believes Next 15's proposal represents a better alternative than the ADV Offer and we urge M&C Saatchi Shareholders to vote in favour of it.”
M&C Saatchi is being advised by Numis and Liberum on the terms of the deal.