M&C Saatchi has received a takeover approach from an “acquisition vehicle” led by software entrepreneur Vin Murria, who was already the top shareholder in the agency group.
In a statement to the stock market about the “possible offer", M&C Saatchi said “it has received a preliminary approach from AdvancedAdvT Limited, a vehicle connected with Vin Murria”.
AdvancedAdvT spent £24 million ($32.4 million) to buy 12 million M&C Saatchi shares, accounting for 9.82% of the company, earlier this week. The purchase price of 200p per share was at a nearly 20% premium to the stock price at the time, around 167p.
Murria already owned a personal stake of about 12.5% in M&C Saatchi. She bought this shareholding cheaply—at around 40p a share or £6 million ($8.1 million) in total—at the start of the pandemic in 2020.
She now has de facto control over about 22.5% of M&C Saatchi via her personal stake and the AdvancedAdvT investment.
M&C Saatchi said: “No proposal has been received but the Board has been told to expect one in the near term.”
However, until it receives that proposal, “there can be no certainty that an offer will be made, nor as to the terms on which any offer might be made,” M&C Saatchi added in its statement.
A spokesperson for AdvancedAdvT, which Murria chairs, declined to make any comment about the takeover approach, beyond its initial statement about the 9.82% share purchase which it described as “a good investment opportunity”.
M&C Saatchi’s share price rose 6% to 200p on news of the possible offer as investors awaited further details.
The company is valued at around £240 million (#324 million) at its current price.
Under stock market rules, the Takeover Code is now in effect because of AdvancedAdvT’s approach, which means the investment company must make clear its intentions by a deadline of 5pm on 3 February.
Murria knows M&C Saatchi well as she became deputy chair in March 2021. The agency group, which is chaired by Gareth Davis, said if it receives the expected offer from AdvancedAdvT, it “would convene an independent committee to consider it”.
Her initial decision to buy shares in 2020 caught M&C Saatchi by surprise as its founders, Jeremy Sinclair, Bill Muirhead and David Kershaw, were grappling with the fallout from an accounting scandal and the Covid crisis.
She declined their offer to join the board as a non-executive director in 2020 but changed her stance following the promotion of Moray MacLennan to chief executive and the departure of the founders in a boardroom clear-out.
Murria is familiar with the agency sector as she was previously a non-executive director of Chime, the owner of VCCP, when it was listed on the stock market.
M&C Saatchi’s shares have been in recovery mode in the last year and the company told investors in a trading update on 15 December that “operating profit will be materially ahead of expectations” after a “strong” Q4 amid a wider recovery.
MacLennan has pushed a strategy of simplification and digitisation. The stock price doubled in 2021 but still remains some way off its 330p level before the accounting problems emerged in August 2019.
As part of its response to AdvancedAdvT’s approach, M&C Saatchi said: “The board confirms that the new strategy announced in Q1 2021 is already delivering, with the Company's performance consistently exceeding expectations, demonstrated by a succession of positive trading upgrades.”