The directors of M&C Saatchi have 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 morning, marking the investment vehicle's first formal offer for the agency group, equating to 207.5 pence per share and valuing the agency at £253.6 million.
Marking the investment vehicle's fourth bid for the advertising group,
AdvancedAdvT is offering either a cash-and-share offer of 2,043 AdvancedAdvT shares and 40 pence in cash; or an all-share offer of 2,530 shares, both based on its last closing share price of 82 pence.
The firm said that this represented a 29.7% hike on M&C Saatchi's pre-bid share price of 160 pence and a 27.3% boost to yesterday's share price of 163 pence.
But the latest bid from Murria falls short of its previous approach in February, an offer that equated to 230 pence per M&C Saatchi share.
Accordingly, in its "Rejection of unsolicited hostile offer from AdvancedAdvT", M&C Saatchi's "independent directors" (those not affiliated with Vin Murria) noted that AdvancedAdvT's original proposal implied a value of 230 pence per share and that today's offer was "materially lower."
According to M&C Saatchi, the directors argue that the offer: "dilutes and transfers value from the holders of M&C Saatchi shares to holders of AdvT Shares"; that it has a "total lack of support from M&C Saatchi's executive committee"; fails to recognise the "fundamental growth potential of M&C Saatchi and its clients' needs, but is based on financial engineering and M&A"; and lacks support from independent shareholders".
M&C Saatchi and Murria's team have been in takeover talks since the start of the year, when AdvancedAdvT made a reverse takeover bid for M&C Saatchi on 6 January at the equivalent of 185p per share. That same month, it came back with a 20% improved offer of around 220p per share.
At the end of April, M&C Saatchi chief executive Moray MacLennan reported record 2021 results for the business after his first year leading the board – upping the ante on Murria's AdvancedAdvT to increase its bid. The board also took the rare step of issuing 2022 and 2023 profit forecasts.
M&C Saatchi reported a 15.1% increase in net revenues to £394.6 million and a headline pre-tax profit of £27.3 million in 2021, after client wins that included PepsiCo, Whoop and Mondelez.
The independent directors of the agency have repeatedly argued Murria's offers have undervalued the business.
Today's announcement from AdvancedAdvT included the news that former Saatchi & Saatchi chief executive and chair Tamara Ingram, former WPP deputy group finance director Christopher Sweetland and former Advanced Computer Software chief operating officer Paul Gibson "will join the enlarged group as non-executive directors".
Given that Murria and AdvancedAdvT control around 22% of M&C Saatchi, the investment vehicle said it now effectively had shareholder support of 42% for the deal.
Murria said: "The combination of M&C Saatchi's existing global brand, culture and foundation with [AdvancedAdvT's] investment capital, experience and proposed new directors provide a tremendous opportunity to accelerate M&C Saatchi's digital growth strategy, organically and by acquisition."
She continued: "The people are the heartbeat of the business. In working alongside them, we believe we will create a business that will benefit employees, clients, and shareholders by capitalising on the growth opportunities presented by the structural changes in M&C Saatchi's markets arising from a rapid acceleration of digitalisation, analytics and data creation.
"The enlarged business will have also significantly broadened its access to additional institutional equity. This will enable an acceleration of future investment and accretive M&A to further enhance the appeal of the M&C Saatchi foundation and attract many more quality assets."