Next 15 Attempts Unlikely Takeover of M&C Saatchi

Next 15 Attempts Unlikely Takeover of M&C Saatchi

Published: October 25, 2022

On October 31, M&C Saatchi investors will reconvene to vote on the Next 15 holding group’s proposed bid for the advertising agency. Shareholders will likely reject the long-anticipated purchase on the grounds of the group’s dwindling share value.

While the Competition and Markets Authority (CMA) greenlit the transaction and several brokers the likes of Peel Hunt have shown support for it, Saatchi bosses probably won’t go through with it.

Brokers see the deal as beneficial for M&C Saatchi, and in the agency’s best interest. Peel Hunt stated it would be “best to weather the storm” and that the deal would make sense given the current short-term conditions.

However, even Next 15 came out to say that it is unlikely for the shareholders to approve the deal, given the digital marketing group’s slump in share price, but that it has to maintain “pricing discipline.”

Next 15 said in a statement:

“While this would be a disappointing outcome and the board of Next 15 continues to believe in the benefits which a combination of Next 15 and M&C Saatchi could deliver, the board will always maintain pricing discipline when pursuing its M&A strategy which may result in certain transactions not proceeding.” 

Next 15 Communications shares have dropped by more than a third of their value over the last six months, causing concern for Saatchi's executive committee.

M&C Saatchi’s majority shareholder Vin Murria is the loudest voice of opposition to the deal. Murria and her investment wing AdvancedAdvT (ADV) have a combined stake in the firm of approximately 22.3%. Their intention is to reject the offer, and they’ve made it known.

“Although Next 15 (NFC) is a credible buyer, its offer price does not reflect the value of foregoing control and the significant synergies available to NFC,” said ADV spokesperson. “Based on the current implied value of NFC’s offer, ADV and Vin Murria intend to vote their shareholdings in M&C Saatchi against NFC’s scheme.”

At the heart of a problem is the per-share price Next 15 is offering for the agency. M&C Saatchi shareholders believe it doesn’t represent the agency’s real or potential value. ADV and Vin Murria will back the deal only if the implied value of the offer surpasses $2.26 per share.

It will take three-quarters of voting shareholders for the deal to go through, but since the agency bosses don’t see the price as “fair and reasonable”, it is not likely to happen.

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