(Alliance News) - Next Fifteen Communications Group PLC on Friday asked M&C Saatchi PLC shareholders to back its takeover offer for the London-based advertising agency, after M&C Saatchi directors switched to rejecting the deal from previously recommending it.
"The board of Next 15 believes that the acquisition represents the most attractive of the choices facing M&C Saatchi shareholders and provides the greatest opportunities for the future development of M&C Saatchi's businesses," Next Fifteen said, referring to a rival takeover offer from AdvancedAdvT Ltd.
Since announcing its share-based acquisition offer in May, Next Fifteen shares have fallen by around 30%. Earlier this month, however, the London-based digital marketing services firm said the terms of its offer for M&C Saatchi were final and would not be increased. "We do not believe that the recent market volatility undermines the fundamental proposition of this transaction," Next Fifteen Chief Executive Officer Tim Dyson said at the time.
On Friday, regarding its falling share price, Next Fifteen said: "The performance of Next 15's shares since January 4, 2022 (the day prior to the first announcement of discussions between ADV and M&C Saatchi) has been similar to relevant market indices and sector peers and that the price of M&C Saatchi shares has been supported over that period by the ADV offer and the proposed acquisition."
Next Fifteen added: "The board of M&C Saatchi has set out very clearly the reasons why it believes the acquisition represents a better alternative than the ADV offer for M&C Saatchi and M&C Saatchi shareholders, and has stated clearly its continued strong support for the strategic, commercial, employee and cultural merits of the acquisition.
"The board of Next 15 therefore urges M&C Saatchi Shareholders to vote in favour of the scheme and to take no action in relation to the ADV offer," Next Fifteen said.
M&C Saatchi directors on Friday withdrew support for the takeover offer from Next Fifteen. M&C Saatchi directors "no longer consider the terms of the Next 15 offer to be fair and reasonable solely on the basis of the deterioration in value of Next 15 shares since the announcement date," M&C Saatchi said.
Due to the drop in Next Fifteen's share price since the May 20 announcement, the deal values each M&C Saatchi share now at 189 pence per share, as opposed to 247.2p at the time, M&C Saatchi noted.
M&C Saatchi on Friday explained that its shareholders "should be aware that when comparing only the Next 15 offer and the ADV offer, the M&C Saatchi directors consider the Next 15 offer to be superior to the ADV offer and Next 15 to be the preferred future owner of the M&C Saatchi business, particularly in light of the strategic, commercial, employee and cultural merits of the Next 15 offer."
M&C Saatchi, however, also warned that it may be prevented from delivering on its own plans as a standalone company.
Its board still recommends against accepting a rival takeover offer by London-based and listed acquisition vehicle AdvancedAdvT, which together with its executive chair, Vin Murria, owns 22% of M&C shares. That offer is currently worth 209.4p, AvancedAdvT noted earlier this week. On Tuesday, AdvancedAdvT published what it said was its final takeover document, which M&C had rejected hours later.
M&C Saatchi shares were 6.2% lower at 166.00 pence each in London on Friday morning. Next Fifteen Communications shares traded 1.6% lower at 895.30p each. AdvancedAdvT shares were untraded at 77.50p each.
M&C Saatchi said Murria's large holding will allow her "to exercise significant influence over the company", including "demanding changes of strategy", which "can prove to be a significant distraction to the company, its management team and directors".
"Accordingly, the M&C Saatchi directors have no certainty that the standalone prospects will be capable of being delivered in the way that they currently envisage," it said.
Back on June 6, Murria was removed from M&C Saatchi's board as non-executive director due to AdvancedAdvT's takeover bid. M&C Saatchi on Friday, referring to Murria, said it would "consider convening a general meeting seeking her re-appointment", if shareholders follow its board's recommendation to reject the offers by both Next Fifteen and AdvancedAdvT.
M&C Saatchi was founded in 1995 by ad executives Charles Saatchi and brother Maurice Saatchi, who also were behind renowned ad agency Saatchi & Saatchi.
By Tom Budszus; tombudszus@alliancenews.com
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