Sticking point comes in the form of Vin Murria’s AdvancedAdvT.
M&C Saatchi shareholders are expected to reject the proposed acquisition of the company by British agency group Next 15. This comes only a few days after the acquisition cleared the regulatory hurdles of convincing the Committee on Foreign Investment in the United States and the Competition and Markets Authority that the deal was viable.
A release from Next 15 notes that the sticking point comes in the form of Vin Murria’s AdvancedAdvT (ADV), which holds around 22.3% of M&C Saatchi. It appears poised to reject the Next 15 takeover unless the implied value of the buyout per share increases.
Part of the issue regarding the price per share appears to be the disappointing results recorded by Next 15 in its latest statement: in September, it announced a pre-tax loss of £8.5m in its financial results for H1 2022.
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Next 15 states: ”While this would be a disappointing outcome and the board of Next 15 continues to believe in the benefits which a combination of Next 15 and M&C Saatchi could deliver, the board will always maintain pricing discipline when pursuing its M&A strategy which may result in certain transactions not proceeding.”
The bid has been backed by brokers, who stated that the acquisition would enable M&C Saatchi to better weather any disruption in the macroeconomic situation. Despite this, the latest bid to buy M&C Saatchi now appears doomed to failure.
The bid was also positively received by M&C Saatchi’s independent directors back in May when the companies agreed on terms for a $390m acquisition.
However, Murria and ADV indicated this outcome would be the case in August, with a spokesperson saying: ”Although Next 15 [NFC] is a credible buyer… its offer price does not reflect the value of foregoing control and the significant synergies available to NFC. Based on the current implied value of NFC’s offer, ADV and Vin Murria intend to vote their shareholdings in M&C Saatchi against NFC’s scheme.”
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ADV has previously made overtures to itself acquiring M&C Saatchi, where it is the largest shareholder. Earlier in the year, an attempt by ADV to initiate the takeover fell short: secured agreements only amounted to 35.4% of M&C Saatchi shares, resulting in the offer failing.
At the time, however, ADV stated it wasn’t done with the acquisition: ”ADV believes changes are still required in order to unlock and accelerate the realization of the wider potential of the M&C Saatchi business and people.”
The rejection of the Next 15 offer would be the latest move by M&C Saatchi in its bid to remain independent. Next 15 has posted a notice to reconvene on October 31st for the M&C Saatchi shareholders to vote on the deal.