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M&C Saatchi PLC on Friday said its directors have withdrawn support for the takeover offer by Next Fifteen Communications Group PLC, while still not supporting a rival offer by AdvancedAdvT Ltd.
M&C Saatchi, however, also warned that it may be prevented from delivering on its own plans as a standalone company.
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,’ the London-based advertising agency explained.
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.
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 said.
Its board still recommends against accepting a rival takeover offer by London-based and listed acquisition vehicle AdvancedAdvT Ltd, 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.
M&C Saatchi shares were 3.6% lower at 170.56 pence each in London on Friday morning. Next Fifteen Communications shares traded 1.5% lower at 896.00p 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.
On Tuesday, AdvancedAdvT published what it said was its final takeover document, which M&C had rejected hours later.
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 was founded in 1995 by ad executives Charles Saatchi and brother Maurice Saatchi, who also were behind renowned ad agency Saatchi & Saatchi.
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