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Next Fifteen Communications Group PLC on Thursday said its agreed M&C Saatchi PLC takeover offer is ‘full and fair’, after undervaluation claims.
It follows takeover rival AdvancedAdvT Ltd on Monday saying its own offer to buy M&C Saatchi values the London-based advertising agency higher than Next Fifteen's deal.
In May, digital marketing services firm Next Fifteen Communications announced it had reached an agreement with M&C Saatchi on a cash-and-shares takeover. It offered 0.1637 of a Next Fifteen share and 40 pence in cash for each M&C Saatchi share, valuing M&C shares at 247.2 pence each.
The Next Fifteen offer had represented a 48% premium to M&C Saatchi's closing price of 167.5 pence on January 4, the last business day before AdvancedAdvT, a London-listed acquisition vehicle led by Vin Murria, said it had taken a minority stake. Up until Monday, Murria was a non-executive director at M&C.
AdvancedAdvT's own offer, tabled in May, would see shareholders in M&C Saatchi receive 2.043 new shares in AdvancedAdvT and 40p in cash, or receive 2.530 new AdvancedAdvT shares.
Shares in M&C Saatchi were down 3.0% to 196.00p each in London on Thursday afternoon, giving it a market capitalisation of £239.6 million.
At the time of AdvancedAdvT's offer, it valued each M&C share at 207.5p, about 40p lower than Next Fifteen's offer of 247.2p. Next Fifteen's acquisition deal valued M&C at about £310.1 million. AdvancedAdvT's proposal had valued M&C lower, at £253.6 million.
However, AdvancedAdvT on Monday said due to the fall in Next Fifteen's share price, its own offer now values M&C Saatchi higher.
Despite this, Next Fifteen on Thursday said the terms of the deal struck with M&C are final and will not be increased. However, it noted it does reserve the right to up its bid if there is an offer or a possible offer for M&C by a third party offeror or potential offeror, other than AdvancedAdvT.
It added: ‘Based on the closing price of a Next Fifteen share on June 8, being the last practicable date prior to release of this announcement, of 1,086.0 pence, the acquisition values each M&C Saatchi share at 217.8 pence.’
Further, the company said that the acquisition value represents a multiple of 10 times M&C Saatchi's forecast headline pretax profit for the 12 months to December 31, 2022, expected to be in the region of £31.0 million. It also represents a multiple of 7.6 times M&C Saatchi's forecast headline pretax profit for the 12 months to December 31, 2023, expected to be in the region of £41.0 million.
Chief Executive Tim Dyson said: ‘We reached agreement with the board and executive team of M&C Saatchi after extensive negotiation and believe our offer is full and fair; we do not believe that the recent market volatility undermines the fundamental proposition of this transaction.’
Shares in Next Fifteen were down 0.6% to 1,080.00 pence each in London on Thursday. AdvancedAdvT's stock was untraded, last quoted at 85.00p.
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