M&C Saatchi Rejects Both Bids But Prefers One

The Directors of M&C Saatchi have issued recommendations to shareholders ahead of votes on two bids for the company, advising rejection of the Next 15 offer purely on account of a drop in its share price, but preferring it to that of rival ADV, if the company is considered unable to continue as an independent.

British-based marcoms consultancy Next 15, parent of data and insights group Savanta, offered a £310m cash and share deal last month, received favourably, and Saatchi directors state that they still approve the other aspects of the offer, but due to a drop in Next 15's own share price no longer feel the total consideration is 'fair and reasonable'. A rival bid by investment vehicle AdvancedAdvT [ADV] was upped earlier this week to 209.4p per share, around 5-6% higher than the 'final' offer by Next 15. The latter had effectively priced M&C's shares at 247.2 pence, but given the fall in Next 15's own value now represents just 189p per M&C share.

The new statement says that 'Based solely on financial terms, the M&C Saatchi Directors consider each of the ADV Offer and Next 15 Offer to be inferior to M&C Saatchi's standalone prospects', but adds: 'However, if those standalone prospects were incapable of being delivered as envisaged, then 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..' This is based on the perceived 'strategic, commercial, employee and cultural advantages' of the Next 15 offer.

The Directors also note that if neither bid is successful, the 22.3% shareholding of ADV's Vin Murria is possibly sufficient to allow her to 'exercise significant influence over the company' and make demands which could serve as 'a significant distraction' to it. In the light of this, the Directors have 'no certainty that the standalone prospects will be capable of being delivered in the way that they currently envisage', and shareholders 'should be aware' that in this event they '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'.

In their own statement, the Board of Next 15 said it was 'disappointed' by the M&C Directors' decision not to directly support their bid, but welcomed their 'continued strong support' for the non-financial aspects of the proposal. Pointing out that the fall in its share price has mirrored the performance of other firms in the sector in a generally difficult market, and that its financials are strong, Next 15 urges shareholders to accept its bid.

Web sites: www.mcsaatchi.com , www.next15.com and www.advancedadvt.com .

All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas, 2024- by Nick Thomas, unless otherwise stated.