TIDMSAA TIDMADVT
RNS Number : 1881Z
M&C Saatchi PLC
13 September 2022
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN
PART, IN OR INTO ANY RESTRICTED JURISDICTION WHERE TO DO SO WOULD
CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH
JURISDICTION.
FOR IMMEDIATE RELEASE
13 September 2022
M&C Saatchi plc
("M&C Saatchi" or the "Company")
Continued Rejection of ADV Offer
Further to the announcement by AdvancedAdvt Limited (" ADV") on
8 September 2022 of the acceleration of the timetable in respect of
the ADV Offer, the M&C Saatchi Directors continue to
unanimously recommend that M&C Saatchi Shareholders reject the
ADV Offer by taking no action in relation to the ADV Offer.
Strong Standalone Future for M&C Saatchi
-- Financial performance: record 2021, strong 2022 interim
results (the "2022 Interim Results") with 52.4% increase
in H1 Headline Profit Before Tax ("PBT")
-- Proven resilience
-- High growth in high margin specialisms
-- Strong cashflow and net cash position
-- Clear plan
ADV Offer: Low Price, High Risk
-- Original ADV Offer is derisory and now even lower at current
implied values. ADV share price is currently 29.1% below
its share price immediately prior to its suspension on
7 January 2022
-- All eighteen members of the M&C Saatchi Executive Committee
("ExCom") remain unanimously opposed to the ADV Offer,
despite further meetings with ADV
-- High risk of damaging culture, triggering a talent exodus,
revenue loss and value destruction
-- Disregard for US regulatory (CFIUS) filings risks significant
revenue loss
As at 8 September 2022, support for the ADV Offer from existing
M&C Saatchi Shareholders was only 0.3% of the issued share
capital, excluding the existing ADV and Vin Murria
shareholdings.
The M&C Saatchi Board urges M&C Saatchi Shareholders to
take no action in respect of the ADV Offer.
Strong Standalone Future for M&C Saatchi
Strong 2022 Interim Results, with momentum off a record 2021,
with LFL H1 2022 net revenue growth of 9.6% versus H1 2021.
Delivered a 52.4% increase in Headline PBT in H1 2022 versus H1
2021 in the face of deteriorating macro-economic conditions.
Outlook on track to deliver forecast Headline PBT forecast in the
region of GBP31m for FY 2022 and GBP41m for FY 2023[1].
H1 2022 results demonstrate that the accelerated delivery of
M&C Saatchi's strategy has continued to drive growth as well as
enabled simplification, digitisation and connection of the global
network.
M&C Saatchi's diversity of capabilities, strength of
counter-cyclical businesses, geographic breadth, and unique
proposition of 'Meaningful Change' provides resilience, helping to
insulate the business from adverse macro-economic conditions.
Long serving and loyal management team in place and supportive
of strategy.
A significantly strengthened balance sheet with GBP39.7million
of net cash as at 30 June 2022 provides increased flexibility
around capital allocation, settlement of put option liabilities as
they fall due and continuation of investment in the delivery of
M&C Saatchi's accelerated strategy.
Clear plan for M&C Saatchi's independence through its
strategy to: reduce cost base, enhance agency margin, further
simplify, i nvest in high margin businesses, drive through new
platforms, and r oll out data and analytics capabilities. It
remains the Board's intention to reinstate dividends from 2022.
The M&C Saatchi Board recognises that a standalone future,
in the absence of any sell-down by Vin Murria or ADV, will continue
to have Vin Murria as a 12.5% shareholder and ADV as a 9.8%
shareholder in M&C Saatchi, however, neither of their holdings
individually or in aggregate represent a controlling stake. The
M&C Saatchi Board will continue to engage with and act in the
best interests of all its shareholders, including Vin Murria and
ADV.
Low Price
The M&C Saatchi Directors continue to believe the ADV Offer
is derisory. They believe that the ADV Offer fails to reflect the
growth and opportunities in front of M&C Saatchi and does not
offer a fair value for the business. The ADV all-share and cash and
share offers value each M&C Saatchi Share at 175.8p and 182.0p
respectively, representing a premia of only 10.6% and 14.5% to the
Closing Price of a M&C Saatchi share on 12 September 2022, and
exchanges a plan which is already delivering for one that has
increased risk, uncertainty and dilution for M&C Saatchi
Shareholders. The implied value of 175.8p and 182.0p respectively
is lower than the 200.0p share price at which ADV acquired its
stake in M&C Saatchi on 5 January 2022, as well as the implied
value of the ADV offer of 207.5p per M&C Saatchi Share as per
ADV's hostile offer on 17 May 2022 which was considered derisory by
the M&C Saatchi Directors.
No Support from ExCom
Despite further meetings between the M&C Saatchi ExCom
members and ADV, all eighteen members of ExCom remain unanimously
opposed to the ADV Offer.
The ExCom members fully endorse the M&C Saatchi Group
strategy, which has delivered record results, and remain committed
to an independent future.
High Risk
As noted in ADV's announcement on 16 August 2022, ADV has not
submitted a CFIUS filing in the US which could result in business
risk for M&C Saatchi given the US Government's sensitivity to
foreign ownership of government contractors and its broad
discretion to terminate relevant contracts without cause. CFIUS
have authority to review the ADV Offer post-closing, which could
lead to further uncertainty and risk to the M&C Saatchi Group's
business going forward. The M&C Saatchi Directors note that
Next 15 have recognised this issue and made the filing and the
M&C Saatchi Directors consider ADV's position to be reckless
and not in the best interests of M&C Saatchi Shareholders.
The ADV strategy, as laid out in its prospectus published on 14
June 2022, demonstrates a clear lack of knowledge and understanding
of the M&C Saatchi business and its clients and is highly
reliant on an M&A strategy that has no guarantee of
success.
Response to ADV Acceleration Statement
The M&C Saatchi Directors make the following points
regarding ADV's statement in respect of the acceleration of the ADV
Offer:
-- M&C Saatchi continues to deliver on its strategy including
digital, data and technology in a challenging market,
as disclosed in the 2022 interim results.
-- M&C Saatchi has issued seven consecutive positive trading
updates in the last 12 months and remains confident in
its profit forecasts guidance for FY 2022 and FY 2023.
ADV bought its stake in M&C Saatchi for 200p per M&C
Saatchi share on 5 January 2022, which it presumably
felt was an attractive price. The M&C Saatchi share price
has declined by 20.5% since then (as per its Closing
Price of 159.0p on 12 September 2022), which the M&C
Saatchi Directors consider to have been driven by a combination
of macro-economic factors, in line with general de-rating
across the sector, as well as the impact of the takeover
bids. Indeed, ADV's own share price is currently 29.1%
below its share price immediately prior to its suspension
on 7 January 2022.
-- ADV's proposed board of directors comprises traditional
advertising network representatives and former partners
of Vin Murria with knowledge of SaaS and technology sales,
and little or no clear experience of M&C Saatchi's business
or sector.
-- M&C Saatchi adheres to the strongest corporate governance.
In light of Vin Murria's previous position as deputy
Chair of M&C Saatchi and failure to notify the M&C Saatchi
Board in advance of ADV's purchase of M&C Saatchi shares,
the M&C Saatchi Directors find ADV's criticism of M&C
Saatchi's corporate governance standards ironic.
-- The put option arrangements for certain M&C Saatchi businesses
are clear, controlled and will be cash funded and have
helped incentivise and drive the valuation creation for
a number of M&C Saatchi's subsidiaries.
-- To the extent exceptional transaction costs have been
incurred in relation to the ADV and Next 15 Offers, they
are at market rates and incurred solely because of the
hostile actions of ADV and their lengthy takeover process.
Timetable
If the ADV Offer lapses following the final date for acceptance
of it on 30 September 2022, the M&C Saatchi Meetings in respect
of the Next 15 Offer will still take place in Q4 2022 once Next 15
receives its regulatory approvals in respect of the CFIUS filing,
unless the Company decides to reconvene the M&C Saatchi
Meetings for an earlier date. As noted in the Company's
announcement on 19 August 2022, the Company will update M&C
Saatchi Shareholders on the expected timing of the reconvened
M&C Saatchi Meetings.
The M&C Saatchi Directors recognise the strength of the
strategic, commercial and cultural fit of the Next 15 Offer,
however they are unable to recommend it to M&C Saatchi
Shareholders due to the current Next 15 share price.
Capitalised terms used but not defined in this announcement
shall have the meanings given to them in the defence document
related to the ADV Offer posted to M&C Saatchi Shareholders on
28 June 2022 (the "M&C Saatchi Defence
Document"), a copy of which is available on M&C Saatchi's website at Defence_Document_vF.pdf (mcsaatchiplc.com) .
For further information please call: M&C Saatchi plc +44 (0)20-7543-4500
Gareth Davis, Chairman
Numis Securities +44 (0)20-7260-1000
Nick Westlake, Stuart Ord, Iqra
Amin, Gary Barford
Liberum +44 (0)20-3100-2000
Neil Patel, Benjamin Cryer, Will
King
Tim Medak, Mark Harrison, M&A
Brunswick +44 (0)207-404-5959
Sumeet Desai, Stuart Donnelly,
Kate Pope
Important Notices
This announcement is not intended to, and does not, constitute
or form part of any offer, invitation or the solicitation of an
offer to purchase, otherwise acquire, subscribe for, sell or
otherwise dispose of, any securities whether pursuant to this
announcement or otherwise, or the solicitation of any vote in
favour or approval of any offer in any jurisdiction where to do so
would constitute a violation of the laws of such jurisdiction and
any such offer (or solicitation) may not be extended in any such
jurisdiction.
Any securities referred to herein have not been and will not be
registered under the US Securities Act of 1933, as amended, or with
any securities regulatory authority of any state of the United
States and may not be offered or sold in the United States absent
registration or an applicable exemption from registration
thereunder.
This announcement has been prepared in accordance with English
law and the City Code of Takeovers and Mergers (the " Code "), and
information disclosed may not be the same as that which would have
been prepared in accordance with laws outside of the United
Kingdom. The distribution of this announcement in jurisdictions
outside the United Kingdom may be restricted by law and therefore
persons into whose possession this announcement comes should inform
themselves about, and observe, such restrictions. Any failure to
comply with the restrictions may constitute a violation of the
securities law of any such jurisdiction.
Disclaimer
Numis Securities Limited ("Numis"), which is authorised and
regulated by the Financial Conduct Authority in the United Kingdom,
is acting exclusively for M&C Saatchi as joint financial
adviser and joint broker and for Next 15 as nominated adviser and
broker and no one else in connection with the ADV Offer and the
Next 15 Offer and will not be responsible to anyone other than
M&C Saatchi or Next 15 for providing the protections afforded
to clients of Numis nor for providing advice in relation to the ADV
Offer and the Next 15 Offer or any other matters referred to in
this Announcement. Neither Numis nor any of its affiliates owes or
accepts any duty, liability or responsibility whatsoever (whether
direct or indirect, whether in contract, in tort, under statute or
otherwise) to any person who is not a client of Numis in connection
with this Announcement, any statement contained herein or
otherwise.
Liberum Capital Limited, which is authorised and regulated by
the Financial Conduct Authority in the United Kingdom, is acting
exclusively for M&C Saatchi as nominated adviser and broker and
no one else in connection with the ADV Offer and the Next 15 Offer
and will not be responsible to anyone other than M&C Saatchi
for providing the protections afforded to clients of Liberum
Capital Limited nor for providing advice in relation to the ADV
Offer and the Next 15 Offer or any other matters referred to in
this Announcement. Neither Liberum Capital Limited nor any of its
affiliates owes or accepts any duty, liability or responsibility
whatsoever (whether direct or indirect, whether in contract, in
tort, under statute or otherwise) to any person who is not a client
of Liberum Capital Limited in connection with this Announcement,
any statement contained herein or otherwise.
Relevant securities in issue
In accordance with Rule 2.9 of the Code, M&C Saatchi
confirms that as at the date of this announcement, it has
122,743,435 ordinary shares of 1 pence each in issue and admitted
to trading on AIM, the market operated by the London Stock Exchange
(and holds 485,970 shares in treasury). The total number of voting
rights in the Company is therefore 122,257,465. The International
Securities Identification Number ("ISIN") for M&C Saatchi's
ordinary shares is GB00B01F7T14.
Disclosure requirements of the Code
Under Rule 8.3(a) of the Code, any person who is interested in
1% or more of any class of relevant securities of an offeree
company or of any securities exchange offeror (being any offeror
other than an offeror in respect of which it has been announced
that its offer is, or is likely to be, solely in cash) must make an
Opening Position Disclosure following the commencement of the offer
period and, if later, following the announcement in which any
securities exchange offeror is first identified. An Opening
Position Disclosure must contain details of the person's interests
and short positions in, and rights to subscribe for, any relevant
securities of each of (i) the offeree company and (ii) any
securities exchange offeror(s). An Opening Position Disclosure by a
person to whom Rule 8.3(a) applies must be made by no later than
3.30 pm (London time) on the 10th business day following the
commencement of the offer period and, if appropriate, by no later
than 3.30 pm (London time) on the 10th business day following the
announcement in which any securities exchange offeror is first
identified. Relevant persons who deal in the relevant securities of
the offeree company or of a securities exchange offeror prior to
the deadline for making an Opening Position Disclosure must instead
make a Dealing Disclosure.
Under Rule 8.3(b) of the Code, any person who is, or becomes,
interested in 1% or more of any class of relevant securities of the
offeree company or of any securities exchange offeror must make a
Dealing Disclosure if the person deals in any relevant securities
of the offeree company or of any securities exchange offeror. A
Dealing Disclosure must contain details of the dealing concerned
and of the person's interests and short positions in, and rights to
subscribe for, any relevant securities of each of (i) the offeree
company and (ii) any securities exchange offeror(s), save to the
extent that these details have previously been disclosed under Rule
8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies
must be made by no later than 3.30 pm (London time) on the business
day following the date of the relevant dealing.
If two or more persons act together pursuant to an agreement or
understanding, whether formal or informal, to acquire or control an
interest in relevant securities of an offeree company or a
securities exchange offeror, they will be deemed to be a single
person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made by the offeree
company and by any offeror and Dealing Disclosures must also be
made by the offeree company, by any offeror and by any persons
acting in concert with any of them (see Rules 8.1, 8.2 and
8.4).
Details of the offeree and offeror companies in respect of whose
relevant securities Opening Position Disclosures and Dealing
Disclosures must be made can be found in the Disclosure Table on
the Takeover Panel's website at www.thetakeoverpanel.org.uk,
including details of the number of relevant securities in issue,
when the offer period commenced and when any offeror was first
identified. You should contact the Panel's Market Surveillance Unit
on +44 (0)20 7638 0129 if you are in any doubt as to whether you
are required to make an Opening Position Disclosure or a Dealing
Disclosure.
Publication on a website
In accordance with Rule 26.1 of the Code, a copy of this
announcement will be made available on the Company's website (
www.mcsaatchiplc.com ) no later than 12 noon (London time) on 14
September 2022. The content of the website referred to in this
announcement is not incorporated into and does not form part of
this announcement.
[1] Headline PBT is forecast in the region of GBP31 million and
GBP41 million for the years ending 31 December 2022 and 31 December
2023 as per the Company's announcement on 29 April 2022 and
subsequent confirmations of those profit forecasts in the
announcement on 20 May 2022, the scheme document published on 17
June 2022 and the defence document published on 28 June 2022.
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END
MSCGZGMLZZFGZZZ
(END) Dow Jones Newswires
September 13, 2022 02:01 ET (06:01 GMT)
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