AdvancedAdvT Limited, the investment firm chaired by tech entrepreneur Vin Murria, has launched its long-awaited bid for advertising agency M&C Saatchi PLC (AIM:SAA).
AdvancedAdvT (ADV) is offering Saatchi shareholders 2.043 ADV shares plus 40p in cash for each Saatchi share, with an all-share alternative of 2.530 shares for each Saatchi share.
Both offers value each share of M&C Saatchi at 207.5 pence and the total issued share capital of M&C Saatchi at £253.6 million, based on last night’s closing share price of ADV of 82.0p.
ADV has been trying to secure the backing of Saatchi’s board for a merger all year – a task made more delicate by Murria’s position as deputy chair of M&C Saatchi’s board – but having received several knockbacks it has decided to take its offer directly to the shareholders.
The offers on the table are improvements on the ones rejected by the Saatchi board on 24 January; at that time, AVT was offering 1.633 AdvancedAdvT share plus 40p cash for each Saatchi share or 2.245 AdvancedAdvT shares for every M&C Saatchi share.
Should all current M&C Saatchi shareholders accept the offer, M&C Saatchi shareholders (excluding ADV and Vin Murria) would own between 53.7% and 59.0% of the enlarged group on a fully diluted basis.
ADV said it has received irrevocable undertakings and letters of intent to accept the offer in respect of around 32.7% of the share capital of M&C Saatchi, which together with the shares ADV already owns implies that roughly 42.5% of the shareholder base is on board with the AVT bid.
Should the merger go ahead, it is envisaged that Murria will become executive chair of the combined group and Gavin Hugill, currently the chief operating officer of ADV, will become chief financial officer and an executive director.
Moray Maclennan has indicated he wishes to stay as chief executive officer of M&C Saatchi but does not wish to join the board of the enlarged group while the remaining directors of M&C Saatchi have confirmed that they intend to resign should the offer be declared unconditional.
"With today's announcement, we are seeking the support of M&C Saatchi shareholders in addition to those shareholders holding 20.2% of the M&C Shares who have already indicated their support. Together, ADV and I already own 22.3% of the M&C Saatchi Shares,” Murria said.
“The combination of M&C Saatchi's existing global brand, culture and foundation with ADV's investment capital, experience and proposed new directors provide a tremendous opportunity to accelerate M&C Saatchi's digital growth strategy, organically and by acquisition.
“The enlarged business will have also significantly broadened its access to additional institutional equity. This will enable an acceleration of future investment and accretive M&A to further enhance the appeal of the M&C Saatchi foundation and attract many more quality assets,” Murria said.
Shares in M&C Saatchi were up 9.8% at 179p in the first hour of trading.