- Mixed firm poised to ship significant shareholder worth creation, accelerated development and enhanced companies to purchasers.
- Mixture unleashes the facility of expertise and know-how world wide to create a prime ten world built-in advertising companies firm that can present the best-in-class options that entrepreneurs must thrive in right now’s market.
- Greater than triples the contribution of high-growth digital companies and experience in comparison with MDC standalone.
- Current MDC frequent shareholders (together with Stagwell) will obtain 26% of the frequent fairness of the mixed firm and Stagwell will obtain share consideration equal to 74% (excluding Stagwell’s pre-transaction holdings of MDC frequent shares and with out giving impact to any conversion of excellent choice shares).
- Complementary choices have the potential to provide 5%+ annual natural income development, lower internet leverage from Four.2x to three.4x and ship over $200 million of professional forma money era in 2021.
- Run-rate value financial savings of ~$30 million from operational efficiencies and built-in companies over time, with 90% anticipated to be achieved inside 24 months.
- Plans to spend money on increasing companies throughout world markets and in expanded digital advertising merchandise.
- MDC Board of Administrators has authorised the Transaction, following a suggestion by a Particular Committee of unbiased administrators.
NEW YORK, Dec. 21, 2020 /PRNewswire/ — MDC Companions Inc. (“MDC”) (NASDAQ: MDCA) and Stagwell Media LP (“Stagwell”) introduced right now that they’ve entered right into a definitive transaction settlement (the “Transaction Settlement”) to mix their respective companies, uniting the award-winning expertise of MDC with the superior know-how platform of Stagwell to create the transformative advertising firm right now’s market calls for (the “Transaction”). Collectively, the businesses will considerably broaden their vary of best-in-class capabilities, depth of experience, and geographic footprint to ship expanded worth to purchasers, and meaningfully speed up the mixed firm’s development.
“This can be a new day for MDC and Stagwell,” stated Mark Penn, Chairman and CEO of MDC Companions, and Managing Associate of The Stagwell Group. “Collectively, they unleash exactly the best expertise and know-how to create a transformative advertising companies firm providing scaled Inventive Efficiency. MDC is widely known for bringing award-winning artistic firepower to the world’s main and most formidable corporations, and Stagwell has been constructed with deep and complex know-how at its core. Unencumbered by legacy buildings or belongings, the mixed firm can have the built-in, fashionable choices entrepreneurs deserve, and the sources to speculate meaningfully in our world capabilities, our expertise, and our purchasers’ future.”
The mixed firm will present the steadiness of built-in options that fashionable entrepreneurs must succeed, together with second-to-none creativity and communications, scaled media and information capabilities, superior client insights, know-how improvement and innovation, and digital transformation. With out giving impact to any conversion of excellent choice shares, the pre-Transaction holders of MDC Class A and Class B shares (“MDC Shares”) would obtain 26% of the frequent fairness of the mixed firm and Stagwell would obtain share consideration equal to 74% of the frequent fairness of the mixed firm (excluding Stagwell’s possession within the mixed firm derived from its possession of pre-Transaction MDC Shares), every on a professional forma foundation. Stagwell and its associates are anticipated to carry roughly 79% of the frequent fairness of the mixed firm instantly after closing of the Transaction (assuming no conversion of excellent choice shares of MDC). Additional particulars on the mixture and the enterprise choices of MDC and Stagwell might be present in our investor presentation at www.mdc-partners.com/buyers and accompanying video at www.mdc-partners.com.
With over eight,600 workers throughout 23 nations, the mixed firm can be ideally suited to steer entrepreneurs into the longer term, with deepened experience in digital companies, and greater than tripling high-growth digital choices to 32% of the mixed enterprise. With a monitor document of collaboration throughout disciplines bringing the best know-how options to its blue-chip purchasers’ enterprise and advertising challenges, the mixed firm’s community additionally brings expertise in constructing and creating its personal proprietary digital merchandise to resolve for gaps within the advertising ecosystem, which collectively may generate $90 – $150 million annual top-line profit over time.
“Having completely evaluated the Transaction – and having obtained the advice of the Particular Committee, which, in shut collaboration with its unbiased authorized and monetary advisors, met extensively to evaluate, consider and negotiate the Transaction – we’re happy to have reached a definitive settlement that maximizes development potential for MDC and alternative for all stakeholders,” stated Irwin D. Simon, Presiding Director of MDC Companions and Chair of the Particular Committee of MDC Companions’ Board of Administrators. “MDC boasts a wealthy historical past and tradition of entrepreneurship whereas innovating to resolve for core shopper and trade wants. Combining these two corporations will construct on that legacy to create an excellent stronger trade chief.”
Extremely Compelling Strategic Rationale
In distinction to MDC remaining a standalone firm, the extremely compelling mixture creates a number one advertising companies firm with enhanced world scale and broadened premium capabilities highlighted by the next strategic rationale:
Strategic Benefits of Mixed Firm:
- Focusing on 5%+ annual natural development, pushed by 10-15% digital advertising development and complementary capabilities, and 9%+ whole annual income development together with new merchandise and acquisitions
- Media and information operation managing $Four.Four billion in media spend, bringing added scale and class
- New income streams from expanded digital and know-how merchandise
- Greater than tripling high-growth digital choices, with 32% of enterprise in digital companies
- Enhanced world scale throughout 23 nations
- Management staff with expertise in worth creation in advertising companies
- Expanded alternatives for high-performing community expertise
- Run-rate financial savings of ~$30 million from operational synergies over time, with ~90% anticipated to be achieved inside 24 months
- Enhanced capital construction, reducing internet leverage ratio from Four.2x to three.4x, after giving full impact to run-rate operational synergies
- Over $200m of professional forma money era in 2021
- Goal to develop to $three billion+ in income in 2025, together with acquisitions, natural development and new merchandise
Governance and Administration
Mark Penn, present CEO and Chairman of MDC and Managing Associate of Stagwell, will proceed as CEO and Chairman of the mixed firm. The administration staff for the mixed firm will encompass present executives from each MDC and Stagwell.
Pursuant to the Transaction Settlement, the board of administrators of the mixed firm will encompass 9 members, together with Mark Penn and Bradley Gross. Three unbiased administrators on the Board will proceed as administrators within the mixed firm and the mixed firm shall trigger such administrators to be nominated on the firm’s subsequent two annual conferences; Stagwell can be entitled to designate the opposite 4 administrators to serve on the Board.
The mixed firm will stay headquartered in New York, NY and can keep a big presence in Washington D.C.
Underneath the phrases of the Transaction Settlement, the Transaction can be effected utilizing an “Up-C” partnership construction, to allow further foundation step-up and depreciation for the mixed firm. Pursuant to the Transaction, MDC can be transformed right into a restricted legal responsibility firm that holds each Stagwell’s subsidiaries and MDC’s working belongings and Stagwell will contribute its working companies to MDC as so transformed. The restricted legal responsibility firm can be owned partly by a newly-formed NASDAQ-listed firm included in Delaware (“New MDC”), and partly by Stagwell. On a professional forma foundation, with out giving impact to any conversion of excellent choice shares of MDC, the pre-Transaction holders of MDC Shares would personal 26% of the frequent fairness of New MDC and Stagwell shareholders can be issued shares of a brand new Class C sequence equal to 74% of the frequent fairness of New MDC and exchangeable into shares of New MDC Class A Shares on a one-for-one foundation at Stagwell’s election.
Moreover, MDC and Stagwell will enter right into a tax receivable settlement pursuant to which New MDC and Stagwell will share within the financial advantages of tax attributes ensuing from Stagwell’s exchanges of “Up-C” models.
Concurrently with the execution of the Transaction Settlement, MDC and an affiliate of Goldman Sachs, as sole holder, agreed to renegotiate the phrases of MDC’s issued and excellent Sequence Four convertible choice shares (the “Goldman Amendments”). The revised phrases scale back the conversion value from $7.42 to $5.00 and lengthen accretion for 2 years at a diminished charge of 6%. In reference to the Transaction, an affiliate of Goldman Sachs, as holder, can have the best to redeem as much as $30 million of its choice shares in change for a $25 million subordinated word or mortgage with a three 12 months maturity (i.e., change at an roughly 17% low cost to face worth). The $25 million word or mortgage will accrue curiosity at eight.zero% each year and is pre-payable any time at par with out penalty.
Topic to market circumstances and different components, MDC intends to conduct a consent solicitation for sure waivers and amendments to its 6.50% senior notes due 2024 (the “Notes”) obligatory to shut the Transaction. MDC has entered into consent and help agreements with holders of greater than 50% of the mixture principal quantity of its Notes to consent to the required waivers and amendments within the consent solicitation.
Path to Completion
The Transaction is topic to customary approvals, together with, however not restricted to, approvals from the MDC shareholders at a particular assembly referred to as for such goal (the “Particular Assembly”), which can embody the approval of (i) 66 2/three% of the votes solid by all holders of varied lessons of shares of MDC, as relevant, and (ii) pursuant to Multilateral Instrument 61-101 – Safety of Minority Safety Holders in Particular Transactions (“MI 61-101″), a easy majority of the votes solid by the holders of relevant lessons of shares of MDC, in every occasion voting individually as a category (except reduction or approval is obtained from the relevant securities regulatory authorities to allow voting as a single class), excluding the votes solid by ” events” for functions of MI 61-101 (which can embody Stagwell, Mark Penn, Goldman Sachs and their respective associates (aside from MDC and its subsidiaries) and their joint actors, as relevant) or any votes in any other case excluded for functions of the “minority approval” decided pursuant to MI 61-101. Further element on the method and MI 61-101 might be discovered beneath. In consideration for the Goldman Amendments, an affiliate of Goldman Sachs has agreed to consent to the Transaction and waive any conversion ratio changes underneath its MDC Sequence Four Choice Shares and has agreed to vote in favor of the Transaction topic to getting into into customary definitive documentation to mirror the Goldman Amendments.
Closing of the Transaction can be topic to the satisfaction of a variety of different circumstances customary for transactions of this nature, together with the receipt of sure regulatory and inventory change approvals. The events are concentrating on a closing within the first half of calendar 12 months 2021, topic to receipt of relevant approvals.
Additional info relating to the Transaction can be contained within the info round / proxy assertion that MDC will put together, file and ship to every MDC shareholder in reference to the Particular Assembly.
Following closing of the Transaction, New MDC will apply to have the Class A shares of New MDC Shares listed on Nasdaq underneath the identical image as Class A shares of MDC commerce right now: “MDCA”.
A duplicate of the Transaction Settlement can be filed on MDC’s SEDAR and EDGAR profile and can be out there for viewing at www.sedar.com and www.sec.gov.
Shareholders with questions relating to the Transaction ought to contact Kingsdale Advisors, MDC’s strategic shareholder advisor and proxy solicitation agent, at 1-877-659-1821 (toll-free inside North America) or at 1-416-867-2272 (outdoors of North America) or by e mail at [email protected].
Moelis & Firm LLC is serving as monetary advisor, and Canaccord Genuity Corp. is serving as unbiased monetary advisor, to the Particular Committee of MDC’s Board of Administrators, with DLA Piper LLP (US) and DLA Piper (Canada) LLP serving as authorized advisor to the Particular Committee of MDC’s Board of Administrators. Cleary Gottlieb Steen & Hamilton LLP and Fasken Martineau DuMoulin LLP are serving as authorized advisors to MDC. J.P. Morgan Securities LLC is serving as unique monetary advisor to Stagwell, and Freshfields Bruckhaus Deringer US LLP and McCarthy Tétrault LLP are serving as authorized advisors to Stagwell. Kingsdale Advisors is serving as strategic shareholder and communications advisor to MDC Companions. Sloane & Firm is serving as communications advisor to MDC.
Administration will host a convention name on Tuesday, December 22, at eight:30 a.m. (ET) to debate its outcomes. The convention name can be accessible by dialing 1-888-346-6216 or toll free 1-412-902-4266. An investor presentation has been posted on our web site at www.mdc-partners.com and could also be referred to throughout the convention name. A recording of the convention name can be accessible inside two hours after the convention name till 12:00 a.m. (ET), December 28, 2020, by dialing 1-412-317-0088 or toll free 1-877-344-7529 (passcode 10150775).
Further Data and The place to Discover It
In reference to the Transaction, MDC and New MDC will file with the SEC a registration assertion on Type S-Four (the “Type S-Four”) that can embody a proxy assertion of MDC (the “Proxy Assertion” and, along with the Type S-Four, the “Proxy Assertion/Prospectus”). This communication shouldn’t be an alternative to the Proxy Assertion/Prospectus or another doc MDC might file with the SEC in reference to the Transaction. When out there, MDC will mail the Proxy Assertion/Prospectus to its shareholders in reference to the votes to approve sure issues in reference to the Transaction.
INVESTORS AND SECURITYHOLDERS OF MDC ARE URGED TO READ CAREFULLY THE PROXY STATEMENT/PROSPECTUS, ONCE AVAILABLE, REGARDING THE TRANSACTION IN ITS/THEIR ENTIRETY WHEN THEY BECOME AVAILABLE (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) OR ANY DOCUMENTS WHICH ARE INCORPORATED BY REFERENCE IN THE PROXY STATEMENT/PROSPECTUS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE TRANSACTION. It’s possible you’ll receive, freed from cost, copies of the Proxy Assertion/Prospectus, when out there, and different related paperwork filed by MDC or New MDC with the SEC, on the SEC’s web site at www.sec.gov. As well as, buyers and securityholders will be capable of receive free copies of the Proxy Assertion/Prospectus and different related paperwork filed by MDC or New MDC with the SEC and from MDC’s web site at http://www.mdc-partners.com.
The URLs on this announcement are supposed to be inactive textual references solely. They aren’t supposed to be lively hyperlinks to web sites. The knowledge on such web sites, even when it could be accessible via a hyperlink ensuing from the URLs or referenced herein, shouldn’t be and shall not be deemed to be included into this announcement. No assurance or illustration is given as to the suitability or reliability for any goal in any respect of any info on such web sites.
No Supply or Solicitation
This communication doesn’t represent a proposal to purchase or change, or the solicitation of a proposal to promote or change, any securities, nor shall there be any sale of securities in any jurisdiction during which such provide, sale or change can be illegal previous to registration or qualification underneath the securities legal guidelines of any such jurisdiction. This communication shouldn’t be an alternative to any prospectus, proxy assertion or another doc that MDC or New MDC might file with the SEC in reference to the proposed transaction. No cash, securities or different consideration is being solicited, and, if despatched in response to the data contained herein, won’t be accepted.
No providing of securities shall be made besides by the use of a prospectus assembly the necessities of the U.S. Securities Act of 1933, as amended. The transaction and distribution of this doc could also be restricted by legislation in sure jurisdictions and individuals into whose possession any doc or different info referred to herein ought to inform themselves about and observe any such restrictions. Any failure to adjust to these restrictions might represent a violation of the securities legal guidelines of any such jurisdiction. No providing of securities can be made instantly or not directly, in or into any jurisdiction the place to take action can be inconsistent with the legal guidelines of such jurisdiction.
Board Approval and MI 61-101 Issues
The Board fashioned a committee (the “Particular Committee”) comprised of unbiased (for functions of MI 61-101) administrators to, amongst different issues, assessment and consider the strategic options out there to MDC, together with the Transaction, and to barter, contemplate and consider such strategic options. On account of its course of, and after receipt of (i) a equity opinion from Moelis & Firm LLC, monetary advisor to the Particular Committee in respect of the Transaction, offering that, as of the date thereof and primarily based upon and topic to the assumptions, limitations and qualifications said in such opinion, the proportion possession of New MDC to be held by the holders of MDC Class A and Class B shares (collectively, the “MDC Widespread Shares”) upon completion of the Transaction is truthful, from a monetary viewpoint, to the holders of MDC Widespread Shares, aside from Mark Penn, Stagwell, Goldman Sachs and their respective associates (aside from MDC and its subsidiaries) (collectively, the ” shareholders”), and (ii) a proper valuation for functions of MI 61-101 (the “Valuation”) from Canaccord Genuity Corp. (“Canaccord Genuity”), unbiased monetary advisor to the Particular Committee, and (iii) an unbiased equity opinion from Canaccord Genuity, offering that as of the date of the Transaction Settlement, and primarily based upon and topic to the constraints and assumptions set forth therein, and such different issues as Canaccord Genuity thought of related, the consideration to be paid by MDC for the Stagwell Topic Entities pursuant to the Transaction Settlement is truthful, from a monetary viewpoint, to the holders of MDC Class A shares (aside from Mark Penn, Stagwell, Goldman Sachs and their Associates), and, the Particular Committee decided, after session with its monetary and authorized advisors, amongst different issues, that it’s in the most effective curiosity of MDC and its shareholders (aside from the holders), and declared it advisable, to advocate that MDC enter into the Transaction Settlement and consummate the Transaction.
The Board, after receipt of the unanimous suggestion of the Particular Committee, (i) unanimously decided (with Mark Penn, Charlene Barshefsky and Bradley Gross abstaining from voting on, or collaborating in any deliberations with respect to the Transaction) that it’s in the most effective pursuits of MDC and its shareholders (aside from the shareholders), and declared it advisable, to enter into the Transaction Settlement and consummate the Transaction, (ii) authorised the execution, supply and efficiency by MDC of the Transaction Settlement, and the consummation of the Transaction, and (iii) resolved to advocate that the shareholders of MDC vote for the resolutions essential to approve the Transaction.
The Transaction will represent a “enterprise mixture” for functions of MI 61-101 and, in accordance with the necessities of MI 61-101, the Valuation was obtained by, and ready underneath the supervision of, the Particular Committee. The outcomes of the Valuation can be supplied to shareholders within the proxy round to contemplate the Transaction. Further particulars relating to the necessities of MI 61-101 can be supplied within the Proxy Assertion/Prospectus, to the extent required.
Cautionary Assertion Concerning Ahead-Wanting Statements
This communication might comprise sure forward-looking statements (collectively, “forward-looking statements“) inside the that means of Part 27A of the U.S. Securities Act of 1933, as amended and Part 21E of the U.S. Trade Act and the US Non-public Securities Litigation Reform Act of 1995, as amended, and “forward-looking info” underneath relevant Canadian securities legal guidelines. Statements on this doc that aren’t historic information, together with statements about MDC’s or Stagwell’s beliefs and expectations and up to date enterprise and financial traits, represent forward-looking statements. Phrases comparable to “estimate,” “challenge,” “goal,” “predict,” “imagine,” “count on,” “anticipate,” “potential,” “create,” “intend,” “may,” “ought to,” “would,” “might,” “foresee,” “plan,” “will,” “steerage,” “look,” “outlook,” “future,” “assume,” “forecast,” “focus,” “proceed,” or the adverse of such phrases or different variations thereof and phrases of comparable substance utilized in reference to any dialogue of present plans, estimates and projections are topic to alter primarily based on a variety of components, together with these outlined on this part. Such forward-looking statements might embody, however will not be restricted to, statements associated to: future monetary efficiency and the longer term prospects of the respective companies and operations of MDC, Stagwell and the mixed firm; info regarding the proposed enterprise mixture with subsidiaries of Stagwell (the “Transaction“); the anticipated advantages of the Transaction; the probability of the Transaction being accomplished; the anticipated final result of the Transaction; the tax impression of the Transaction on MDC and shareholders of MDC; the timing of the Particular Assembly the shareholder approvals required for the Transaction; regulatory and inventory change approval of the Transaction; and the timing of the implementation of the Transaction. Various vital components may trigger precise outcomes to vary materially from these contained in any forward-looking assertion, together with the dangers recognized in our filings with the SEC.
These forward-looking statements are topic to varied dangers and uncertainties, a lot of that are outdoors MDC’s management. Vital components that might trigger precise outcomes and expectations to vary materially from these indicated by such forward-looking statements embody, with out limitation, the dangers and uncertainties set forth underneath the part entitled “Danger Elements” within the Proxy/Prospectus, and underneath the caption “Danger Elements” in MDC’s Annual Report on Type 10-Okay for the year-ended December 31, 2019 underneath Merchandise 1A, in MDC’s Quarterly Report on Type 10-Q for the three-months ended March 31, 2020 underneath Merchandise 1A, in MDC’s Quarterly Report on Type 10-Q for the six-months ended June 30, 2020 underneath Merchandise 1A and in MDC’s Quarterly Report on Type 10-Q for the nine-months ended September 30, 2020. These and different danger components embody, however will not be restricted to, the next:
- an lack of ability to understand anticipated advantages of the Transaction or the incidence of difficulties in reference to the Transaction;
- opposed tax penalties in reference to the Transaction for MDC, its operations and its shareholders, that will differ from the expectations of MDC or Stagwell, together with that future modifications in tax legislation, potential will increase to company tax charges in the US and disagreements with the tax authorities on MDC’s willpower of worth and computations of its tax attributes might end in elevated tax prices;
- the incidence of fabric Canadian federal earnings tax (together with materials “emigration tax”) on account of the Transaction;
- the impression of uncertainty related to the Transaction on MDC’s and Stagwell’s respective companies;
- direct or oblique prices related to the Transaction, which may very well be larger than anticipated;
- the chance situation to completion of the Transaction will not be happy and the Transaction will not be accomplished; and
- the chance of events difficult the Transaction or the impression of the Transaction on MDC’s debt preparations.
You’ll be able to receive copies of MDC’s filings underneath its profile on SEDAR at www.sedar.com, its profile on the SEC’s web site at www.sec.gov or its web site at www.mdc-partners.com. MDC doesn’t undertake any obligation to replace any forward-looking statements on account of new info, future developments or in any other case, besides as expressly required by legislation. All forward-looking statements on this communication are certified of their entirety by this cautionary assertion.
Members within the Solicitation
MDC, New MDC and their respective administrators and govt officers and different members of administration and workers, could also be deemed to be contributors within the solicitation of proxies from MDC’s shareholders with respect to the approvals required to finish the proposed Transaction. Extra detailed info relating to the identification of those potential contributors, and any direct or oblique pursuits they might have within the proposed transaction, by safety holdings or in any other case, can be set forth within the Proxy Assertion/Prospectus when filed with the SEC. Data relating to MDC’s administrators and govt officers is ready forth within the definitive proxy assertion on Schedule 14A filed by MDC with the SEC on Could 26, 2020 and within the Annual Report on Type 10-Okay filed by MDC with the SEC on March 5, 2020. Further info relating to the pursuits of contributors within the solicitation of proxies in respect of the Particular Assembly can be included within the Proxy Assertion/Prospectus to be filed with the SEC. These paperwork can be found to the shareholders of MDC freed from cost from the SEC’s web site at www.sec.gov and from MDC’s web site at www.mdc-partners.com.
You could not construe the contents of this doc as authorized, tax, regulatory, monetary, accounting or different recommendation, and you’re urged to seek the advice of with your individual advisors with respect to authorized, tax, regulatory, monetary, accounting and different penalties of the Transaction, the suitability of the Transaction for you and different related issues regarding the Transaction.
ABOUT MDC Companions
MDC Companions is without doubt one of the most influential advertising and communications networks on the earth. As “The Place The place Nice Expertise Lives,” MDC Companions is widely known for its revolutionary promoting, public relations, branding, digital, social and occasion advertising company companions, that are liable for a number of the most memorable and efficient campaigns for the world’s most revered manufacturers. By leveraging know-how, information analytics, insights and strategic consulting options, MDC Companions drives artistic excellence, enterprise development and measurable return on advertising funding for over 1,700 purchasers worldwide. For extra details about MDC Companions and its associate companies, go to our web site at www.mdc-partners.com and observe us on Twitter at http://www.twitter.com/mdcpartners.
ABOUT The Stagwell Group
The Stagwell Group is the primary and solely unbiased, digital-first, and fully-integrated group of dimension & scale servicing manufacturers throughout the continuum of selling companies. Collaborative by design, Stagwell shouldn’t be weighed down by legacy factors of view and its individuals are united of their need to innovate, evolve, develop and ship superior outcomes for his or her purchasers. Stagwell’s excessive development manufacturers embody specialists in 4 classes: digital transformation and advertising, analysis and insights, advertising communications, and content material and media. The handle of Stagwell is 1808 Eye Avenue, Flooring 6, Washington, D.C., 20006.
MDC Companions Inc.
One World Commerce Middle, Flooring 65
New York, NY 10007
The Stagwell Group
Beth Lester Sidhu
1808 Eye Avenue, Flooring 6
Washington, D.C., 20006
SOURCE MDC Companions Inc.