The Ongoing Tug of War for Ownership of M&C Saatchi

Mergers and acquisitions can be messy affairs. And if you’ve been following the saga of M&C Saatchi you’ll have noticed almost daily alerts on the two suitors chasing it for acquisition. M&C Saatchi was founded in 1995 by brothers Maurice and Charles Saatchi, Jeremy Sinclair, Bill Muirhead and David Kershaw—following an acrimonious split with Publicis-owned Saatchi & Saatchi. It currently has a client list that includes Adidas, PepsiCo, Disney, Heineken, the Commonwealth Bank and Uber—not to mention a lucrative contract with the British government. A hostile reception Since January, the agency has been the subject of a hostile takeover attempt by AdvancedAdvT Limited (AdvT), which is led by Vindoka 'Vin' Murria. At the time, Murria was M&C's deputy chair. AdvT argued the acquisition would be "an opportunity to build a data, analytics and digitally focused creative marketing business with a strong balance sheet and additional management expertise." In June, M&C directors felt it was "not appropriate" for Murria to be re-elected to the board. She was removed from her position as a result. Murria and AdvT together own 22.3% of M&C Saatchi, valued at around $307 million (253.6 million pounds). But that number was eclipsed when another competitor entered the fray: Next 15 Communications. Fresh off the merger with Engine Group, Next 15 set its sights on M&C Saatchi. An offer of $375 million (310 million pounds) was agreed upon as the preferred offer by the board. But Murria continued her fight: "Our final offer has greater potential to deliver shareholders and employees faster growth and significant value creation," she said, adding that Next 15 was "a credible buyer of M&C Saatchi." In its investor presentation, Next 15 said it would create an "opportunity to build a global growth consulting group that can offer a compelling alternative to the big four consulting and marketing services groups. A group that leverages top-flight creativity, technology, data, business consulting and digital marketing to deliver meaningful change." A slide from suitor Next 15's investor presentation Next 15 said it would offer complementary client bases, an "enhanced" public sector offering and clearer focus on data and analytics. It would also invest across EMEA and APAC, as well as strengthen eCommerce, paid media, demand/lead generation and strategic consulting services. Unlike AdvT, which during the last AGM voted against the reappointment of Gareth Davis and non-executive Lisa Gordon as directors, Next 15 has placed "great importance" on retaining existing management and employees—and revealed that it had already held some initial "high level" planning and post-merger discussions. The future business would be led by a team featuring key people from both Next 15 and M&C Saatchi, the investor proposal revealed. Stalling the outcome But in June, another wrench was thrown into the deal. M&C Saatchi directors argued the deal shouldn't go forward. "The M&C Saatchi Directors, who have been so advised by Numis and Liberum as to the financial terms of the Next 15 Offer, no longer consider the terms of the Next 15 Offer to be fair and reasonable solely on the basis of the deterioration in value of Next 15 Shares since the Announcement Date." "We reached agreement with the board and executive team of M&C Saatchi after extensive negotiation and believe our offer is full and fair," said Next 15 CEO Tim Dyson. "We do not believe that the recent market volatility undermines the fundamental proposition of this transaction." We are focused on our very successful strategy of delivering meaningful change for our clients—and accelerating our journey of simplification, digitization and connection.Moray MacLennan, chief executive officer for M&C Saatchi The two parties were then set to meet August 19 to vote on the bid. But following M&C's strong half-year results and the tumble in Next 15 shares, another disparity emerged. M&C Saatchi reported a 10% growth in revenue year-on-year with an anticipated pre-tax profit of around $37.5 million (31 million pounds) by the end of 2022. The better-than-expected results are anticipated to continue through 2022, with heightened demand for M&C's specialist services in the U.K., Americas and Asia. "We are focused on our very successful strategy of delivering meaningful change for our clients and accelerating our journey of simplification, digitization and connection," Moray MacLennan, chief executive officer for M&C Saatchi, told Adweek. "Our recent client wins, including PepsiCo, Barclays, and Samsung, reflect the strength of our approach. We remain confident that we will continue on this trajectory." So that leaves three potential outcomes: AdvT wins. Next 15 wins. Or M&C Saatchi remains independent. "I suspect Murria wanted to get it cheap, shift out the old guard and bring new people in, reorganize, make some acquisitions and then flip it on or potentially list it again," explained Barry Dudley, a partner at media and marketing consultancy Green Square. "Meanwhile, Next 15 sees it as a business that is performing very well, that perhaps needs a little help to take it forward—but wants to largely keep it going with the plans existing management have in place." So, more time is added to the clock. None of the parties involved was able to comment for this story due to regulations for listed businesses in the U.K. UPDATED AdvT informed the market that it intended to vote against the Next 15 offer. The statement said that AdvT believed that the offer price "does not reflect the value of foregoing control and the significant synergies available to Next 15. Based on the current implied value of Next 15's offer, AdvT and Vin Murria intend to vote their shareholdings in M&C Saatchi against Next 15's scheme." However ADvT's own takeover attempt would fail when by the deadline of the end of September it had failed to agree to buy more than 35.5% of shares in the agency. In mid-October, Next 15 announced that it had received regulatory approval in the U.K. Australia and the U.S.to proceed with its own agreed takeover. On October 31, following a court meeting, M&C Saatchi announced that the agreed offer by Next 15 had lapsed. The directors said that with both takeovers no longer proceeding, they believed in its "strong, standalone future prospects" and that they would look forward to implementing the business strategy independently. Post-Next 15 Merger, Engine Creative and ODD Unite Under House 337 Name