excitement around a possible takeover of international ad group M&C Saatchi has dissipated further after the company revealed talks had not produced a new offer.
The stand-off between the group’s independent directors and its deputy chairman, Vin Murria, is to extend into a third month after the two sides agreed to move back the “put up or shut up” deadline from today until 28 April.
Software entrepreneur Murria has declined to improve on the proposal made by her company AdvancedAdvT of 230p per M&C Saatchi share. This was received by M&C Saatchi on 27 January and announced to the market on 3 February.
This morning, M&C Saatchi chairman Gavin Davis and the independent directors reiterated their coolness toward that proposal, saying it undervalued the company and they could not recommend that shareholders accept it.
However, by agreeing to extend the deadline they have decided not to force Murria into either making a formal offer or withdrawing her interest for six months.
The market reaction to the announcement resulted in a drop in M&C Saatchi’s share price for a fourth day in a row, to 165.63p as of 9.10am.
This is close to the lowest point the shares have reached since the initial news of the takeover approach in early January drove them up by 25% to 210p.
With no rival offer having emerged to put M&C Saatchi seriously in play, Murria appears content to play a waiting game. Her proposal would pay M&C Saatchi shareholders in shares of AdvancedAdvT, rather than cash, although they could elect to receive 40p per share in cash with the remaining 190p in AdvancedAdvT shares.
However, the value of AdvancedAdvT’s shares is the subject of one of the many concerns expressed about the approach by the M&C Saatchi independent directors.
Today’s statement from M&C Saatchi said: “The directors of the Company other than Vin Murria (the ‘Independent Directors’) reiterate the concerns previously raised in the Company’s announcements of 7 and 24 January 2022, including the continued undervaluation of the Company; the strategy of the enlarged AdvT group and, in particular, the lack of clarity over the deliverability of, and execution risk associated with, their proposed ‘digital-led M&A’ strategy; the impact on culture; how AdvT intends to ensure the retention and appropriate incentivisation of M&C Saatchi’s key management and employees; and the valuation of AdvT’s ordinary shares.
“As such, the unanimous conclusion of the Independent Directors continues to be that the Further Revised Proposal undervalues the Company and its prospects and would therefore not be recommendable. However, the Independent Directors believe that it is in the best interests of all stakeholders in M&C Saatchi to continue to engage constructively in discussions with AdvT.”