M&C Saatchi goes on the defensive as ad agency again urges shareholders to reject Vin Murria’s ‘low price and high risk’ takeover bid
- M&C Saatchi has reiterated that the bid ‘materially undervalues’ the company
- Shareholders would face dilution of their shares after Adv’s takeover, board says
- Takeover risks to ‘damage M&C Saatchi’s core business’ and cause loss of talent
M&C Saatchi has once again urged shareholders to reject the latest takeover bid from Vin Murria’s Advanced Advt, which values the advertising agency at £254million.
In a 48-page long defence document, the M&C Saatchi’s board has reiterated that the bid ‘materially undervalues’ the company.
It said that the terms of the offer ‘represent both a low price and a high risk’ for M&C Saatchi shareholders, who would face dilution of their shares.
Going alone: M&C Saatchi’s board said shareholders will be better off if the business continues as an independent company following its existing strategy
‘Directors believe that the Adv offer fails to reflect the growth and opportunities in front of M&C Saatchi without offering a fair value for the business, and exchanges a plan which is already delivering for one that has increased risk, uncertainty and dilution for M&C Saatchi shareholders,’ it adds.
The board says that Murria’s offer will ‘dilute and transfer the value’ from M&C Saatchi shareholders to Adv shareholders – ‘in particular’ to Murria and Marwyn Investment Management ‘through their promoter incentive arrangements’.
It reiterated that a takeover from Murria posed a risk of damage to M&C Saatchi’s core business and loss of talent.
The board also said a separate offer from Next Fifteen continued to undervalue the business, but ‘solely because of the deterioration of Next 15’s share price in current market conditions’.
It added: ‘Accordingly, the M&C Saatchi Directors currently recommend neither the Adv offer nor the Next 15 offer, believing that greater value will accrue to M&C Saatchi shareholders if M&C Saatchi continues as an independent company following its existing strategy.’
However, it said the Next Fifteen offer was still superior to Murria’s ‘from a long term financial, strategic, commercial, employee and cultural perspective’.
Earlier this month, M&C Saatchi made a U-turn on its decision to back a takeover offer from Next Fifteen, just less than a month after agreeing to a deal.
The group said it no longer considered the terms of Next Fifteen’s offer to be ‘fair and reasonable’ after a drop in the media company’s shares since the deal was agreed on 20 May.
M&C Saatchi shares were down 0.3 per cent to 158.61p in early trading on Monday, while Next Fifteen shares were 0.6 per cent lower at 944p.