Next Fifteen’s prospective offer for M&C Saatchi likely to be rejected

Shareholders at M&C Saatchi are set to vote against Next Fifteen’s proposed bid for the advertising agency when they convene in ten days’ time.

A special meeting has been arranged for the company’s investors on 31 October, where they will decide on the takeover offer, which received regulatory approval from the Competition & Markets Authority earlier this week.

At least three-quarters of voting shareholders are needed for the deal to go ahead, but Saatchi bosses have said the price is not ‘fair and reasonable’ and are refusing to give their backing.

Two of Saatchi’s most prominent backers, Vin Murria and her investment vehicle Advanced AdvT, whose combined stake in the firm totals around 22.3 per cent, have already declared their intention to reject the offer. 

Murria and AdvT will only back the deal should Next Fifteen’s share price reach a level whereby the implied value of the offer surpasses at least £1.97 per share. 

Over the last six months, Next Fifteen shares have fallen by more than a third. On Friday, they were 2.8 per cent higher at £8.45. 

The two parties have just spent nine months trying to acquire the advertising business, making a number of successive bids, with the last worth £254million.

That pursuit failed at the end of September after receiving very little support from investors and unanimous opposition from Saatchi’s executive committee, leaving Next Fifteen the only suitor on the table.

The media company’s offer – a mix of shares and cash – has received the backing of broker Peel Hunt, which said it would be ‘best to weather the storm’ should short-term economic conditions worsen.

However, Next Fifteen admits the proposal is unlikely to be approved, given the slump in its share price since it agreed on a takeover deal for Saatchi.

Bosses at the group said a rejection by Saatchi investors would be ‘disappointing’ but vowed to ‘always maintain pricing discipline when pursuing its M&A strategy, which may result in certain transactions not proceeding’.

Saatchi was founded in 1995 by brothers Maurice and Charles after the pair were ousted in a shareholder revolt at their previous firm, Saatchi & Saatchi.

Known for close ties to the Conservative Party, its clients have included some major corporate names, ranging from retail behemoth Amazon, to fashion brands Burberry and Hugo Boss and Dutch flagship airline KLM.

Its most recent financial results showed headline pre-tax profits climbed by more than half to £16million on the back of strong performances from its specialisms, including global & social issues and sponsorship and talent.