Aleda Stam
Jun 2, 2021

MDC Partners shareholder opposes looming merger with Stagwell

Indaba Capital Management says the deal’s terms favor Stagwell.

Stagwell president and managing partner and MDC CEO Mark Penn
Stagwell president and managing partner and MDC CEO Mark Penn

One of MDC Partners' biggest shareholders is against the company's proposed merger with Stagwell Media, citing terms that favor Stagwell investors unfairly.  

In a letter to the Special Committee of the Board of Directors, the committee convened to evaluate the merger proposal, Indaba Capital Management said the proposed deal is "conflict riddled and poorly structured," adding that it undervalues MDC. 

Indaba also claims in the letter that the proposal to provide MDC shareholders with 26% ownership of the combined company is too low and that MDC shareholders should instead own 37.5% to 40%.   

Both MDC and Stagwell are led by Mark Penn, who is the founder and managing partner of Stagwell and has been CEO of MDC since 2019. Penn will get 75% of profits on Stagwell's fund. 

The committee responded to Indaba's letter with a statement expressing disappointment that Indaba made its concerns public and disagreement about the company's suggestions. 

"MDC has been in the midst of a transformation, but has not yet returned to organic growth and remains constrained by the high leverage on its balance sheet as well as a portfolio of agencies that are heavily weighted to creative and traditional advertising," the committee's statement read.  

Indaba, which owns about 12% of MDC stock, plans to vote against it next month.

MDC global agencies include 72andSunny, Forsman and bodenfors, Anomaly, and Allison + Partners.

Source:
PRWeek

Related Articles

Just Published

1 day ago

Alibaba posts slowest quarterly growth on record, ...

Losses increased because of decline in value of investments in publicly-traded companies; backing for newer businesses such as Taocaicai and Taobao Deals; and the continued impact of Covid.

1 day ago

Tech Bites: Week of May 23, 2022

News from Yahoo, JCDecaux, CREA, PubMatic, Xaxis and more. Plus, Alibaba reaches a milestone in the quarter of serving over 1 billion annual active consumers in China

1 day ago

Heineken sends RFI to creative agencies

The global brewer is looking to kick off meetings in Cannes in pursuit of a new global creative ecosystem.

1 day ago

Should luxury brands reduce their dependence on China?

For luxury brands, taking the current Covid-impacted softness in mainland China as a cue to reduce exposure to the market is the wrong approach.