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(Alliance News) - Acquisition vehicle AdvancedAdvT Ltd said Monday it has improved its takeover offer for London-based advertising agency M&C Saatchi PLC to include a cash element, but this has been rejected by the M&C Saatchi's independent directors.
M&C Saatchi confirmed receiving the revised offers but said they "continue to significantly undervalue the company and its prospects, particularly in light of the continued strong performance". It said the new approach was unanimously rejected by its independent directors.
M&C Saatchi shares were trading flat at 175.00 pence midday Monday, giving back their morning gain. AdvancedAdvT shares were unchanged at 98.49p.
AdvancedAdvT offered 1.633 AdvancedAdvT shares plus 40 pence cash for each M&C Saatchi share. The offer was an alternative to an all-share offer of 2.245 AdvancedAdvT shares for each M&C Saatchi share.
The mixed offer is worth 200.83p per Saatchi share, a 15% premium to Saatchi's current price. The all-share offer is worth 221.11p, a 26% premium.
Under the mixed offer, M&C Saatchi shareholders would own about 57% of the enlarged company, while under the all-share offer they would own 65%. Both calculations exclude the 12 million shares of M&C Saatchi - a 9.8% stake - already owned by AdvancedAdvT.
AdvancedAdvT also said it would move its shares to AIM, where M&C Saatchi currently is listed, from the London Main Market as part of M&C Saatchi offer. But following the rejection, AdvancedAdvT said it is "considering its options".
Vin Murria, the executive chair of AdvancedAdvT, is an M&C Saatchi director as well. AdvancedAdvT also is backed by Marwyn Investment Management.
AdvancedAdvT said it would name Murria as chair of a merged company, while M&C Saatchi Chief Executive Officer Moray MacLennan would remain in post.
"The board of AdvancedAdvT believe this is a truly beneficial merger; it provides significant investment and additional expertise to build on the existing M&C platform, seeking to drive M&C's future growth at significantly greater pace for the benefit of all stakeholders," it said.
For its part, M&C Saatchi noted the takeover offer from AdvancedAdvT would dilute current M&C Saatchi shareholders. It also remarked that while AdvancedAdvT promised "transformational digital-led M&A" for the enlarged company, no details have been provided about potential targets.
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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