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(Alliance News) - Shares in M&C Saatchi lost almost 10% early Friday, after acquisition vehicle AdvancedAdvT Ltd said it is exploring a "share-exchange merger" with the London-based ad agency.
M&C Saatchi shares were down 8.3% at 192.50 early Friday. However, the stock remains up 14% from its close on Tuesday, lifted after AdvancedAdvt said on Wednesday it had bought a 9.8% stake in the company and M&C Saatchi subsequently confirmed the two were in takeover talks.
AdvancedAdvt's own shares were suspended from trading in London from Friday, as the share-exchange merger would constitute a reverse takeover.
AdvancedAdvT, formerly known as Marwyn Acquisition Co I Ltd, listed in March. It is backed by Marwyn Investment Management, with a 15% stake.
Vin Murria, the executive chair of AdvancedAdvT, also is an M&C Saatchi director, so M&C Saatchi had said it will form an independent committee to consider any offer made. Murria owns 12.5% of M&C Saatchi and 13.3% of AdvancedAdvT.
This means the combined stake of AdvancedAdvT and Murria in M&C Saatchi is 22.3%.
In its statement on Friday, AdvancedAdvT said a merger would combine the M&C Saatchi brand and platform with its own funding and experience at mergers and acquisition. The combined company would focus on "a data, analytics and digital creative marketing strategy plus M&A", it said.
"The merger would also enable M&C to resolve the legacy put option issue as well as providing the cash to accelerate investment in the business and transformational digital led M&A," AdvancedAdvT said.
"The company brings additional management skills with considerable expertise and experience to complement, accelerate and grow the enlarged group through strategic and bolt-on acquisitions in fragmented international markets."
M&C Saatchi was founded in 1995 by ad executives Charles Saatchi and brother Maurice Saatchi, who also were behind renowned ad agency Saatchi & Saatchi.
By Tom Waite; thomaslwaite@alliancenews.com
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