REG - Advancedadvt Limited M&C Saatchi PLC - Acceleration Statement

AdvancedAdvTAnnouncement

08/09/2022 07:00

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RNS Number : 6911Y  Advancedadvt Limited  08 September 2022

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR PART, IN, INTO OR
FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE
RELEVANT LAWS OF SUCH JURISDICTION.

 

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION.

 

8 September 2022

 

 

AdvancedAdvT Limited ("ADV")

 

 

Acceleration Statement

 

 

•   Acceleration Statement: acceptances of ADV's Final Offer must be
received by 1.00pm (London time) on the new Unconditional Date 30 September
2022

 

•    M&C Saatchi Shareholders have a clear choice with ADV's Final
Offer providing higher value and greater deliverability within a shorter
timetable than Next Fifteen's final offer

 

•     ADV had a series of positive meetings during July with the members
of the M&C Saatchi Executive Committee. Consequently, ADV believes that
the M&C Saatchi Executive Committee is committed to M&C Saatchi's
future and looks forward to working with them

 

•      ADV and Vin Murria do not support the status quo at M&C
Saatchi continuing

 

•     Greater potential: the ADV board believes that its proposals have
greater potential than both NFC and the status quo to deliver faster growth
and significant value creation for M&C Saatchi Shareholders and employees

 

•     Proposed cancellation of the standard listing of ADV Shares on the
Official List and proposed admission of ADV Shares to trading on AIM should
ADV's Final Offer Succeed

 

 

Acceleration Statement

 

ADV wishes to bring the Final Offer process to a conclusion and offer M&C
Saatchi Shareholders a clear choice with ADV's Final Offer providing higher
value and greater deliverability within a shorter timetable than NFC's final
offer.

 

ADV therefore announces that the new Unconditional Date of the Final Offer is
30 September 2022.

 

This is an acceleration statement to which Rule 31.5 of the Code applies
("Acceleration Statement"). Please see the section entitled "Acceleration
Statement - further details" below.

 

ADV's Final Offer for M&C Saatchi

 

•    Strategy. ADV's proposals provide a clear opportunity to accelerate
M&C Saatchi's digital growth strategy, organically and by acquisition.

 

•     Track record. ADV's board of directors, current and proposed, offers
a track record of shareholder return and expertise straddling both the
creative and digital industries.  Christopher Sweetland, who was Deputy Group
Finance director of WPP Group and Tamara Ingram, who was CEO and Chair of
Saatchi and Saatchi UK as well as the global CEO of J Walter Thompson
Worldwide and Paul Gibson, who was Chief Operating Officer of Advanced
Computer Software, will join the Enlarged Group as non-executive directors.

 

•    Resources & experience. ADV currently has more than £100m net
cash and had experience on over 85 M&A transactions. ADV is in talks to
put the capital to work, to help drive and accelerate the Enlarged Group's
strategy through investment in both M&A and organic development. Given the
valuation falls across the wider sector in recent months, ADV's net cash and
M&A expertise is even more valuable in terms of ability to create future
value for the enlarged shareholder base.

 

•     Strategy execution. ADV plans to build on M&C Saatchi's existing
brand, culture, 2,650 strong talent base, global foundations and purpose of
'navigating, creating and leading meaningful change'. With better access to
investment capital it can build a data, analytics and digitally focussed
creative marketing business attracting the best clients and the best talent in
the industry.  An M&A strategy centred around digital transformation,
data analytics and customer experience would be hugely beneficial to the
Enlarged Group's increased growth rates and potential re-rating.

 

•    M&C Saatchi Shareholders majority ownership & future
benefits. M&C Saatchi Shareholders are not 'selling' their group. They
will collectively retain majority ownership of between 53.7 per cent. and 59.0
per cent. of the Enlarged Group on a fully diluted basis, versus a current
holding of 77.7 per cent. of the current issued share capital (when excluding
22.3 per cent. owned by ADV and Vin Murria).  M&C Saatchi Shareholders
would therefore retain over four times the percentage ownership offered under
the NFC final offer.

 

•     Institutional capital.  The Enlarged Group will benefit from
significantly broadening its access to additional institutional equity, which
has the ability to accelerate a re-rating of the Enlarged Group for the
existing shareholders, reflecting an improved market position, enhanced growth
prospects, and increased liquidity of the shares. An increased rating will
enable an acceleration of future investment and accretive M&A to further
enhance the appeal of the M&C Saatchi foundation and attract many more
quality assets.

 

•     Greater potential. The ADV board believes that its proposals have
greater potential than both NFC and the status quo to deliver faster growth
and significant value creation for M&C Saatchi Shareholders and employees.

 

•    Regulatory. ADV reiterates that it has taken appropriate expert
advice and has received all mandatory regulatory clearances to proceed with
its Final Offer.

 

M&C Saatchi Executive Committee

 

ADV had a series of positive meetings during July with the members of the
M&C Saatchi Executive Committee. Consequently, ADV believes that the
M&C Saatchi Executive Committee is committed to M&C Saatchi's future
and looks forward to working with them.

 

Following these meetings, ADV re-iterates that it attaches great importance to
the skill, experience and retention of the wider M&C Saatchi management
and employees. The ADV Directors continue to believe that the Enlarged Group
will provide greater opportunities to M&C Saatchi management, employees
and all stakeholders and an opportunity to recognise and embrace a
high-performing culture.

 

As set out in the Final Offer Document, the ADV LTIP prioritises and aligns
the reward of senior management with the creation of shareholder value and
return for the Enlarged Group. Upon the Offer becoming unconditional, ADV will
extend the ADV LTIP to senior management across the Enlarged Group in order
align shareholder and participants' objectives.

 

NFC's final offer

Since the release of NFC's firm offer announcement on 20 May 2022, the price
of a NFC Share has fallen by 36.3 per cent, from 1,266 pence to 806 pence at
the close of business on 7 September 2022.

 

As at 7 September 2022, NFC's final offer value had therefore declined to
171.9 pence per M&C Saatchi Share.

 

On the basis of ADV's share price at the close of business on 7 September
2022, ADV's final All Share Offer was equivalent to 187.2 pence per M&C
Saatchi Share and the final Cash and Share Offer was equivalent to 191.2 pence
per M&C Saatchi Share.

 

Using ADV's NAVPS value of 91.2p per share as at 31 August 2022, ADV's final
All Share Offer is equivalent to 230.7 pence per M&C Saatchi Share and the
final Cash and Share Offer is equivalent to 226.3  pence per M&C Saatchi
Share.

 

ADV and Vin Murria do not support the status quo at M&C Saatchi continuing

 

•     ADV and Vin Murria are significant investors in M&C Saatchi,
owning an aggregate 22.3 per cent. Neither party believes that the current
M&C Saatchi board has the attributes or resources to deliver the value
creation available to M&C Saatchi.

 

•      They will not support the status quo at M&C Saatchi
continuing.

 

•    Should ADV's Final Offer not complete, ADV and Vin Murria will
actively seek to engage with the M&C Saatchi board to implement changes to
deliver the company's potential.

 

•      The board of M&C Saatchi has:

 

• failed to address that the group has over recent years fallen behind its
competition in terms of digital capabilities and growth, in turn putting its
creative base at higher risk from competition

 

•   failed to simplify the business and its operations at pace

 

•  not addressed the significant put options liabilities that have led to
significant dilution since 2018 and significant outflows of cash in the form
of dividends. The cash available for investment in M&A and growth
opportunities has thus been restricted

 

•   not generated share price growth. M&C Saatchi has de-rated over
recent years despite announcing strategy updates, upgrading results, and
publishing 2022 and 2023 profit before tax forecasts

 

•  M&C Saatchi's share price is currently 154.4 pence and has averaged
172.1  pence this year to 7 September

 

• demonstrated inconsistent  and incautious leadership, describing ADV's
proposals as "derisory" yet for a time continued to recommend NFC's offer at a
lower value only to then withdraw its recommendation for NFC's offer soon
thereafter

 

•    demonstrated poor cost and cash management with possible transaction
costs of £9.5m, as M&C Saatchi disclosed in its 2022 interim results
announcement

 

•   allowed potential conflict of interest with Numis acting both for
M&C Saatchi and a competing offeror NFC

 

Acceptance Levels

 

As at the date of this announcement, ADV holds 12,000,000 M&C Saatchi
Shares and Vin Murria holds 15,237,985 M&C Saatchi Shares, together
representing approximately 22.28 per cent. of M&C Saatchi's issued
ordinary share capital.

 

In accordance with Rule 17 of the Code, ADV announces that as at 1.00 p.m.
(London time) on 7 September 2022 (being the last Business Day prior to the
date of this announcement), ADV had received valid acceptances of the Final
Offer in respect of 15,615,441 M&C Saatchi Shares, representing
approximately 12.77 per cent. of the issued ordinary share capital of M&C
Saatchi, which ADV may count towards the satisfaction of the Acceptance
Condition together with the M&C Saatchi Shares it already owns. This
includes Vin Murria's acceptance of the Final Offer, pursuant to the terms of
her irrevocable undertaking. So far as ADV is aware, except for Vin Murria,
none of these acceptances have been received from persons acting in concert
with ADV.

 

Therefore, taken together with M&C Saatchi Shares that it already holds,
ADV has acquired or agreed to acquire pursuant to the Final Offer or otherwise
27,615,441 M&C Saatchi Shares representing approximately 22.59 per cent.
of all M&C Saatchi Shares.

 

Save as disclosed in this announcement, as at the close of business on 7
September 2022 (being the last Business Day prior to the date of this
announcement), neither ADV nor any ADV Director nor so far as the ADV
Directors are aware any other person acting, or deemed to be acting, in
concert with ADV:

 

(a)        had an interest in, or right to subscribe for, relevant
securities in M&C Saatchi;

(b)      had any short position in (whether conditional or absolute and
whether in the money or otherwise), including any short position under a
derivative, any agreement to sell or any delivery obligation or right to
require another person to purchase or take delivery of, relevant securities of
M&C Saatchi;

(c)       had procured an irrevocable commitment or letter of intent to
accept the terms of the Final Offer in respect of relevant securities of
M&C Saatchi; or

(d)        had borrowed or lent any M&C Saatchi Shares.

 

Furthermore, neither ADV nor any ADV Director nor, so far as the ADV
Directors are aware, any other person acting, or deemed to be acting, in
concert with ADV is party to any arrangement in relation to relevant
securities of M&C Saatchi. For these purposes, an "arrangement" includes
any indemnity or option arrangement, any agreement or any understanding,
formal or informal, of whatever nature, relating to M&C Saatchi Shares
which may be an inducement to deal or refrain from dealing in such securities.

 

Proposed cancellation of the standard listing of the ADV Shares on the
Official List and proposed admission of ADV Shares to trading on AIM should
ADV's Final Offer succeed

 

As set out in the Prospectus and Final Offer Document, conditional upon the
Final Offer becoming unconditional, applications will be made to (i) the FCA
to cancel the standard listing of ADV Shares on the Official List; (ii) the
London Stock Exchange to cancel the admission to trading of the ADV Shares on
the Main Market; and (iii) the London Stock Exchange for the existing ADV
Shares, together with the New ADV Shares, to be admitted to trading on AIM.

 

Pursuant to Listing Rule 5.2.8, the date of the above delisting and Admission
will be no fewer than 20 Business Days following the date of this
announcement, and within the timetable required by the Code. The precise date
of delisting and Admission will be announced in due course.

 

General

 

Defined terms used but not defined in this announcement have the meanings
given to them in the Final Offer Document.

 

This announcement has been released without the prior approval of M&C
Saatchi and without the prior approval of NFC.

 

The person responsible for this announcement is Antoinette Vanderpuije,
Company Secretary.

 

 

Enquiries:

 

 AdvancedAdvT Limited                                           +44 (0) 20 7004 2700
 Antoinette Vanderpuije
 Investec Bank plc                                              +44 (0)20 7597 5970
 Christopher Baird, Alex Wright, Carlton Nelson, Nick Prowting
 Meare Consulting                                               +44 (0)7990 858548

Adrian Duffield

 

 

 

Acceleration Statement - further details

 

The terms of the Final Offer Document originally provided that the
Unconditional Date of the Final Offer, being the date by which all Conditions
of the Final Offer must be satisfied or, to the extent permitted, waived,
failing which the Final Offer would lapse in accordance with its terms, was 13
August 2022 (which was also "Day 60" of the Final Offer). However, because the
Final Offer became in competition with NFC's scheme of arrangement (the "NFC
Scheme"), the Panel issued a ruling on 25 July 2022 to establish a framework
to resolve the competing offers for M&C Saatchi (the "Panel Ruling").

 

The Panel Ruling stated that the timetable for the Final Offer was to be set
by reference to the timetable for the NFC Scheme. As the M&C Saatchi
Shareholder meetings in relation to the NFC Scheme were adjourned on 19 August
2022, Day 60 (ie the latest date by which all of the conditions to ADV's Final
Offer must be satisfied or waived) has been re-set to the fourth business day
before the Court hearing to sanction the NFC Scheme. As these shareholder
meetings have not yet been reconvened, and there is no date for the Court
sanction hearing, there is presently no calendar date determined for Day 60.

 

ADV's Final Offer Document reserved the right to bring forward the
Unconditional Date in accordance with the provisions of the Code, and ADV has
exercised this right in this announcement by making the Acceleration Statement
that the new Unconditional Date of the Final Offer is 30 September 2022.

 

In accordance with Rule 31.5(b) of the Code, ADV announces that Condition (C)
of the Final Offer (being a condition relating to official authorisations or
regulatory clearances) has now either been satisfied or (where capable of
waiver) waived and that Conditions (D) to (I) of the Final Offer have now
either been satisfied or waived to the extent such Conditions relate to
official authorisations or regulatory clearances. Save to the extent satisfied
or waived, the Conditions of the Final Offer remain outstanding (including the
Acceptance Condition and the Admission Condition).

 

In accordance with Rule 31.5(e) of the Code, ADV reserves the right to set
this Acceleration Statement aside in the following circumstances:

 

(a)        in the event of the Final Offer being recommended by the board
of M&C Saatchi;

(b)       if a third party (excluding, for the avoidance of doubt, NFC in
respect of its current final scheme/any future final offer) announces a
possible offer for M&C Saatchi or there is otherwise an announcement of a
possible offer for M&C Saatchi by a third party or an announcement which
refers to the existence of a new potential offeror for M&C Saatchi
(whether the potential offeror is identified or not);

(c)       if a third party (excluding, for the avoidance of doubt, NFC in
respect of its current final scheme/any future final offer) announces a firm
intention to make an offer for M&C Saatchi; and

(d)        in wholly exceptional circumstances as provided for by Rule
31.5(e)(ii) of the Code.

 

Under Rule 31.5(c) of the Code, as a result of the Acceleration Statement
being made (and unless the Panel consents otherwise), Rule 31.8 of the Code is
disapplied and there will therefore be no restriction on the date by which the
board of M&C Saatchi may announce any material new information.

 

Further Information

 

Unless specified to the contrary, terms defined in the Final Offer Document
have the same meaning in this announcement.

 

This announcement is for information purposes only and is not intended to and
does not constitute, or form part of, an offer, invitation or the solicitation
of an offer or invitation to purchase, or otherwise acquire, subscribe for,
sell or otherwise dispose of any securities, or the solicitation of any vote
or approval in any jurisdiction pursuant to the Final Offer or otherwise, nor
shall there be any sale, issuance or transfer of securities of M&C Saatchi
pursuant to the Final Offer or otherwise in any jurisdiction in contravention
of applicable laws. The Final Offer will be made solely by means of the Final
Offer Document and (in respect of M&C Saatchi Shares held in certificated
form) the acceptance forms accompanying the Final Offer Document, which will,
together, contain the full terms and conditions of the Final Offer including
details of how it may be accepted. Any decision in respect of, or other
response to, the Final Offer should be made only on the basis of the
information contained in the Final Offer Document and (in respect of M&C
Saatchi Shares held in certificated form) the acceptance forms accompanying
the Final Offer Document.

 

M&C Saatchi Shareholders are advised to read the Final Offer Document and
(in respect of M&C Saatchi Shares held in certificated form) the
acceptance forms accompanying the Final Offer Document carefully when they
become available because they will contain important information in relation
to the Final Offer.

 

Investec, which is authorised by the Prudential Regulation Authority (the
"PRA") and regulated by the Financial Conduct Authority and PRA in the United
Kingdom, is acting exclusively as financial adviser to ADV and for no one else
in connection with the Final Offer and will not be responsible to any person
other than ADV for providing the protections afforded to clients of Investec,
nor for providing advice in relation to the Final Offer, the content of this
announcement or any matter referred to in this announcement. Neither Investec
nor any of its subsidiaries, branches or 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 Investec in connection with this announcement, any statement
contained herein or otherwise.

 

Overseas Jurisdictions

 

The release, publication or distribution of this announcement in jurisdictions
other than the United Kingdom may be restricted by law and therefore any
persons who are subject to the laws of any jurisdiction other than the United
Kingdom should inform themselves about and observe any applicable
requirements.  This announcement has been prepared for the purpose of
complying with English law and the Code and the information disclosed may not
be the same as that which would have been disclosed if this announcement had
been prepared in accordance with the laws of jurisdictions outside the United
Kingdom.

 

Copies of this announcement and any formal documentation relating to the Final
Offer are not being, and must not be, directly or indirectly, mailed or
otherwise forwarded, distributed or sent in or into or from any Restricted
Jurisdiction and persons receiving such documents (including custodians,
nominees and trustees) must not mail or otherwise forward, distribute or send
it in or into or from any Restricted Jurisdiction.  Unless otherwise
permitted by applicable law and regulation, the Final Offer may not be made,
directly or indirectly, in or into, or by the use of mails or any means or
instrumentality (including, but not limited to, facsimile, e-mail or other
electronic transmission, telex or telephone) of interstate or foreign commerce
of, or of any facility of, a national, state or other securities exchange of
any Restricted Jurisdiction and the Final Offer may not be capable of
acceptance by any such use, means, instrumentality or facilities.

 

The availability of the Final Offer to M&C Saatchi Shareholders who are
not resident in and citizens of the United Kingdom may be affected by the laws
of the relevant jurisdictions in which they are located or of which they are
citizens. Persons who are not resident in the United Kingdom should inform
themselves of, and observe, any applicable legal or regulatory requirements of
their jurisdictions.

 

Further details in relation to M&C Saatchi Shareholders in overseas
jurisdictions will be contained in the Final Offer Document, and the ADV
Prospectus, as appropriate.

 

The Final Offer will be subject to the applicable requirements of the Code,
the AIM Rules, the London Stock Exchange and the FCA.

 

Notices to US Shareholders

 

The Final Offer relates to securities in a non-US company registered in
England and Wales quoted on AIM, and is subject to the disclosure
requirements, rules and practices applicable to companies listed in the United
Kingdom, which differ from those of the United States in certain material
respects. This announcement has been prepared in accordance with UK style and
practice for the purpose of complying with the laws of England and Wales and
the rules of AIM. US shareholders should read this entire document.
Accordingly, the Final Offer will be subject to disclosure and other
procedural requirements that are different from those applicable under US
domestic tender offer procedures. US shareholders should note that M&C
Saatchi is not listed on an American securities exchange, it is not subject to
the periodic reporting requirements of the US Securities Exchange Act of 1934,
as amended, and is not required to, and does not, file any reports with the
SEC thereunder. The financial statements of M&C Saatchi have been prepared
in accordance with IFRS, which may not be comparable to financial statements
of US companies.

 

It may be difficult for US shareholders to enforce certain rights and claims
arising in connection with the Final Offer under US federal securities laws
since ADV and M&C Saatchi are located outside the United States, and their
officers and most of their directors reside outside the United States. It may
not be possible to sue a non-US company or its officers or directors in a
non-US court for violations of US securities laws. It also may not be possible
to compel a non-US company or its affiliates to subject themselves to a US
court's judgment.

 

To the extent permitted by applicable law and in accordance with the Takeover
Code and normal U.K. practice, ADV or its affiliates or agents may make
purchases of, or make arrangements to purchase, shares of M&C Saatchi
outside the United States otherwise than under the Final Offer.

 

The Final Offer will be subject to the applicable requirements of the Code,
the AIM Rules, the London Stock Exchange and the FCA.

 

Publication on website

 

In accordance with Rule 26 of the Takeover Code, a copy of this announcement
will be made available, subject to certain restrictions relating to persons
resident in Restricted Jurisdictions, on ADV's website
at www.AdvancedAdvT.com (http://www.AdvancedAdvT.com) by no later than noon
(London time) on the day following this announcement. The content of this
website is not incorporated into and does not form part of this announcement.

 

 

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