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The directors of M&C Saatchi plc continued their  to the final offer proposed by AdvancedAdvT (ADV), an investment vehicle connected with Vin Murria, a former director of the company, after the hostile bidder published an bringing the unconditional date forward to 30 September 2022.

ADV M&C Saatchi shareholders an all-share offer with a cash and share alternative which values the advertising company at £256m and represents a 10.8% premium to M&C Saatchi’s closing price on 5 January 2022 (the last business day before the commencement of the offer period).

ADV initially approached M&C Saatchi regarding a on 6 January 2022, less than a year after Vin Murria acquired a 13% stake in M&C Saatchi. However, the M&C Saatchi independent directors argued that the offer terms significantly undervalued the company (see: M&C Saatchi snubs initial reverse takeover approach from tech magnate Vin Murria). Despite the initial rebuff, ADV announced a firm offer for M&C Saatchi on 17 May 2022 which was immediately rejected by the company and turned hostile causing the company’s share price to drop 16%.

Days later on 20 May 2022, Next Fifteen Communications group plc (NFC) and M&C Saatchi announced that they had agreed on the terms of a competing cash and share offer for M&C Saatchi, recommended by the board, which valued the company at £310m. A seemingly unfazed ADV responded to the higher competing offer by that the terms of its own offer were final and would not be increased. ADV also published a reminding M&C Saatchi and NFC that together, ADV and Vin Murria owned 22.3% of M&C Saatchi’s issued share capital. The M&C independent directors responded by voting to remove Vin Murria as a director of M&C Saatchi on 6 June 2022 that ‘in light of the offers for the company by each of AdvancedAdvT Limited, a vehicle connected with Vin Murria, and Next Fifteen Communications Group plc, it is not appropriate for Vin Murria to be proposed for re-election as a director’.

Shortly after the announcement of NFC’s firm offer, the price of NFC’s shares plummeted 30% which resulted in the value of the NFC offer for M&C Saatchi reducing to £234m, 8.6% lower than ADV’s offer for the company. Despite this, the M&C Saatchi independent directors continued to recommend the NFC offer prompting ADV to publish its own of the competing NFC proposal where the company commented:

‘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, as NFC stated in its announcement on 20 May 2022. The board of M&C Saatchi continues to recommend NFC's offer, which as at 1 June 2022 offered lower value, yet described AdvancedAdvT's final offer as "derisory" AdvancedAdvT has requested that the board of M&C Saatchi clarifies its analysis of the financial terms of each of the two competing offers…’

Following ADV’s call for M&C Saatchi to re-evaluate both offers, the M&C independent directors promptly for the NFC bid on 17 June 2022 and published a to the ADV bid on 28 June 2022, arguing that the unsolicited offer is low on price and high on risk.

After a three-month long stalemate, on 8 September 2022 ADV published an in an attempt to bring the hostile takeover battle to a conclusion. In accordance with Rule 31.5 of the Takeover Code (Code), M&C Saatchi shareholders must now accept the bid before the accelerated deadline of 30 September 2022 (for further information on Rule 31.5—Acceleration statements, see Practice Note: (a subscription to Lexis®PSL Corporate is required)).

On 22 September 2022, ADV , in accordance with Rule 17 of the Code, that it has support for its takeover from 22.6% of M&C Saatchi shareholders (for further information on Rule 17, see Practice Note: (a subscription to Lexis®PSL Corporate is required)). Aside from the 12 million shares owned by the investment vehicle and approximately 15.2 million shares owned by Murria (amounting to 22.3% of M&C Saatchi’s share capital), ADV currently has the support of 15.6 million shares, representing 12.8% of M&C Saatchi’s share capital, from shareholders who are not acting in concert with ADV.

ADV urged M&C Saatchi shareholders who have not yet accepted the final offer to do so as soon as possible as it needs at least 90% of shareholders' support, or a minimum of 50% of voting rights in order to satisfy the acceptance condition and complete the takeover, unless it decides to lower the acceptance threshold.

M&C Saatchi’s current market capitalisation is £186m however its independent directors continue to reject the 37.6% premium £256m ADV offer in favour of the competing NFC offer, despite the lack of official board recommendation of the NFC offer due to the NFC share price decline.

M&C Saatchi provided its rationale for continuing to reject the ADV offer in its stating:

‘The ADV offer carries a high risk of damaging [the] company’s culture, triggering a talent exodus, revenue loss and value destruction. The ADV strategy, as laid out in its prospectus, demonstrates a lack of knowledge and understanding of our business and clients. It is reliant on an M&A strategy with no guarantee of success… The Board strongly believes in the standalone prospects of M&C Saatchi. However we cannot be certain of successfully delivering these standalone prospects given the 22.3% shareholding bloc of ADV and Vin Murria. The Board recognises the strength of the strategic, commercial and cultural fit of Next 15. The sole reason that the Board is not recommending Next 15 is the current low offer value, driven by the recent Next 15 share price decline.’

M&C Saatchi have shareholders to take no action in response to the acceleration of the unconditional date.

Market Tracker will continue to monitor the ADV and NFC transactions as they develop.