Next15 swoops in to agree surprise $387m takeover deal for M&C Saatchi

Deal comes days after M&C Saatchi directors rejected rival offer from Vin Murria's AdvancedAdvT

May 23, 2022 04:21:00 AM | Article | Ida Axling

M&C Saatchi has agreed a deal to sell the agency group for £310 million (US$387 million) to bigger rival Next15 in a dramatic move – days after rejecting a lower offer from Vin Murria's investment vehicle AdvancedAdvT.

In a joint statement to the stock market, the board of Next 15 and the independent board directors of M&C Saatchi said they had agreed terms for a recommended deal worth 247p per share – in a mix of cash and shares.

Under the terms of the deal, M&C Saatchi shareholders will receive 40p in cash and 0.1637 of a new Next 15 share for each M&C Saatchi share, valuing M&C Saatchi at approximately £310.1m.

The move comes just three days after M&C Saatchi directors urged shareholders to reject Vin Murria investment vehicle AdvancedAdvT's latest offer, describing it as "derisory" and saying it "significantly undervalues the business".

AdvancedAdvT’s latest bid came on 17 May, marking the investment vehicle's first formal offer for the agency group, equating to 207.5p per share and valuing the agency at £253.6 million (US$317 million).

The offer from Next 15 represents a premium of 49.8% to the closing price of 165p per M&C Saatchi share on 19 May.

M&C Saatchi chairman, Gareth Davis, said in a statement that the M&C Saatchi independent directors all considered Next 15’s offer to be “far superior” to the offer by AdvancedAdvT, describing it as a “clear repudiation of ADV’s response statement that it strongly disagreed its bid undervalued M&C Saatchi”.

In March, Next 15 bought Engine Group UK, owner of ad agency Engine Creative, for an enterprise value of £77.5m. At the time, Next 15 chief executive Tim Dyson told Campaign that the business was planning on making further acquisitions.

Commenting on the M&C Saatchi deal, Dyson said: "This is an exciting opportunity to bring together two highly complementary businesses, creating a truly global and diversified group with exceptional capabilities, clients and talent. 

“Bringing M&C Saatchi into the Next 15 group provides us with a step change in our scale and global reach, and an enhanced ability to offer digitally driven solutions to growth-minded organisations. 

“M&C Saatchi is synonymous with creativity and strategy, whereas Next 15 has built a reputation around its technology and data-driven offering. This makes for a great combination, and we are confident we can accelerate the ambitions of both businesses, creating significant value for our clients, our people and our shareholders."

Moray MacLennan, CEO of M&C Saatchi and a key figure in the group since its foundation in 1995, said: "This merger will be a powerful accelerator for M&C Saatchi. Through connecting with Next 15 capabilities and companies, our ability to deliver meaningful change for existing and new clients will be deepened and broadened, turbo charging our next phase of growth."

Davis added: "The M&C Saatchi independent directors are pleased to unanimously recommend this alternative, more attractive offer which we are confident is in the best interests of M&C Saatchi shareholders and M&C Saatchi’s other key stakeholders. 

“The recommended cash and share acquisition from Next 15 implies a value for M&C Saatchi that represents a significant premium to recent trading levels and provides M&C Saatchi shareholders with an opportunity to crystallise value and to benefit from the potential future upside of the enlarged group.”

AdvancedAdvT said in response to the news: “The board of AdvancedAdvT is considering its options. A further announcement will be made as and when appropriate.”

Together, AdvancedAdvT and Vin Murria own 22.3% of M&C Saatchi’s issued share capital, which still gives them significant leverage.

Next 15's acquisition is planned as a scheme of arrangement, which requires 75% of M&C Saatchi's shareholders to approve the deal in a vote.

Murria bought an initial stake of around 13% in M&C Saatchi at a low price at the start of the pandemic in 2020 and then AdvancedAdvT, an investment vehicle that she leads, bought nearly 10% in January and made the first of a series of takeover approaches.

She has claimed M&C Saatchi could grow faster if it focused on digital, data and analytics and used M&A to expand.

M&C Saatchi's shares were trading at 330p in August 2019 when accounting irregularities led to a slump in the share price, a boardroom exodus and the promotion of MacLennan to CEO in January 2021.

(This article first appeared on CampaignLive.co.uk)