The digital marketing group Next Fifteen has struck a £310m deal to buy M&C Saatchi, gazumping the tech entrepreneur Vin Murria’s takeover attempt, and ending almost three decades of independence of one of Britain’s most famous advertising agencies.
London-listed Next Fifteen, which has a £1.2bn market valuation, has tabled a cash and share offer for M&C Saatchi valuing the company at 247p a share that it aims to seal through a scheme of arrangement.
The use of the court-approved tactic, which requires Next Fifteen to secure approval from 75% of shareholders, forces any investors against the deal to sell once the threshold is met.
The news of the deal sent shares in M&C Saatchi soaring by 35% to an almost three-year high, as investors hoped it might prompt another bid from Murria.
M&C Saatchi’s independent directors, who have rejected four offers from Murria’s investment vehicle AdvancedAdvT (ADV) since January, have unanimously recommended the offer to shareholders.
“The M&C Saatchi independent directors are pleased to unanimously recommend this alternative, more attractive offer, which we are confident is in the best interests of M&C Saatchi shareholders and M&C Saatchi’s other key stakeholders,” said Gareth Davis, the chairman of the agency group.
“The M&C Saatchi independent directors all consider Next Fifteen’s offer to be far superior to the offer announced earlier this week by ADV, and a clear repudiation of ADV’s response statement that it strongly disagreed its bid undervalued M&C Saatchi.”
The company board called Murria’s latest 207.5p a share offer, which valued the business at £254m, “derisory” and said there was a “total lack of support” from its 18-strong executive team, which feared a talent and client exodus.
Murria is deputy chair of M&C Saatchi and its biggest single shareholder, and ADV control 22% of the agency. Earlier this week she said that her latest offer had support from a further 21% of M&C Saatchi shareholders, although she had only secured irrevocable undertakings committing to it from a few per cent.
ADV, in which Murria owns a 13% stake, says it is now “considering its options” and the company board will have to decide if there is more value in a counter offer to take control of M&C Saatchi or accepting a lucrative exit of its investment.
Murria, who bought a 12.5% personal stake in M&C Saatchi during the pandemic in 2020 when they were trading at an 11-year low of less than 40p, will get at least a six or even sevenfold return on her investment if she accepts the offer.
Next Fifteen’s deal values her stake at almost £39m, and that of ADV at just over £30m.
The sale marks the end of 27 years of independence for the agency, which was co-founded by brothers Maurice and Charles Saatchi in 1995 and which has been responsible for famous work including the Tony Blair “demon eyes” ad for the Tories in the 1997 general election and creating the “world’s favourite airline” slogan for British Airways.
“This is an exciting opportunity to bring together two highly complementary businesses creating a truly global and diversified group with exceptional capabilities, clients and talent,” said Tim Dyson, the chief executive of Next Fifteen.
“M&C Saatchi is synonymous with creativity and strategy, whereas Next Fifteen has built a reputation around its technology and data-driven offering. This makes for a great combination, and we are confident we can accelerate the ambitions of both businesses, creating significant value for our clients, our people and our shareholders.”
