M&C Saatchi, with founders, major shareholders and senior executives backing a sale, will become part of Next Fifteen, a digital marketing company.
The independent directors of M&C Saatchi agreed to be acquired for £310 million (AUD550 million), in a cash and shares deal.
A fourth bid valued at £254 million via director and deputy chair Vin Murria, a software entrepreneur, was rejected. Her consolation prize will be up to £50 million profit from the sale of shares.
But what does the new ownership mean for M&C Saatchi, founded in 1995 by Maurice & Charles Saatchi, Jeremy Sinclair, Bill Muirhead and David Kershaw?
M&C Saatchi, according to Next Fifteen, will become a consultancy taking on the big four consulting and marketing services groups.
Internally, the key 18 senior executives running the global agency have expressed “strong” support for the deal.
Tim Dyson, CEO of Next Fifteen, sees two highly complementary businesses being brought together.
He says this will create a truly global and diversified group with exceptional capabilities, clients and talent.
“Bringing M&C Saatchi into the Next Fifteen group provides us with a step change in our scale and global reach, and an enhanced ability to offer digitally driven solutions to growth-minded organisations,” he says.
“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."
Moray MacLennan, CEO of M&C Saatchi, described the acquisition as a “merger” which will be a “powerful accelerator” for the global advertising business.
“Through connecting with Next Fifteen capabilities and companies, our ability to deliver meaningful change for existing and new clients will be deepened and broadened, turbo charging our next phase of growth,” he says.
Gareth Davis, chair of M&C Saatchi, praised the cash and shares deal: "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.
“The recommended cash and share acquisition from Next Fifteen implies a value for M&C Saatchi that represents a significant premium to recent trading levels and provides M&C Saatchi Shareholders with an opportunity to crystallise value and to benefit from the potential future upside of the enlarged group. “
Next Fifteen's vision is to build a growth consultancy that combines specialist capabilities with global scale.
The digital platyer believes that the successful business models for the future will be purpose-driven, driving meaningful change, and that creativity will be a key differentiator.
The board of Next Fifteen says this creates a viable alternative for customers not well served by the big four consulting and marketing services groups.
Here's Next Fifteen's vision:
Complementary strengths and strategies:
- Next Fifteen's and M&C Saatchi's geographic presences are highly complementary. The Enlarged Group is expected to be a leading player with strong brands in countries across the globe, including the US, UK, Asia and Australia. This diversifies and expands Next Fifteen's and M&C Saatchi's existing exposure to attractive end-markets with favourable long-term growth trends and strong industry fundamentals.
- Loyal, blue-chip clients with minimal overlap bringing together a diversified, high-quality group of international customers.
- M&C Saatchi's expertise in the public sector, in both the UK and particularly the US, would add a new dimension to Next Fifteen's service offering and marketing position.
- Next Fifteen's in-house data analytics capability could be immediately leveraged across the Enlarged Group to create significant new client opportunities.
Investments in data and technology would be applied to a larger platform and client base.
Bringing together two highly talented organisations led by experienced senior management teams
- Next Fifteen's and M&C Saatchi's teams have an established track record for service delivery, innovation and creativity.
- The Enlarged Group would provide further opportunities for M&C Saatchi and Next Fifteen to continue to hire and retain the best talent.
Significant benefits for clients across the enlarged group
- The combination would enable clients to benefit from a broader suite of relevant and complementary capabilities across the globe.
- Clients would benefit from access to the combined talent of the Enlarged Group.
Founders Kershaw, Sinclair and Muirhead are reportedly in favour of the takeover. Kershaw: 'I can speak on behalf of my fellow founders that we will certainly support it. It is good from a shareholder point of view, puts it at a value we think is fair and for the people in the business we're delighted as well.”
Next Fifteen posted full year net revenue growth of 32% to £165.9 million. Organic net revenue growth was 23%.
Here's the CEO on the vision for Next Fifteen, what he described as a growth consultancy.
M&C Saatchi reported better than expected results for the year to December with net revenue growth of 10.6% and like-for-like of 15.1%.
The company posted record headline operating profit £31.1 million, up from £12 million in 2020 and a statutory profit before tax of £21.6 million versus a £8.5 million loss.
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