Advertising firm M&C Saatchi has withdrawn its backing for a £310 million takeover bid by consultancy Next Fifteen.
M&C Saatchi said it no longer found the terms of the deal to be “fair and reasonable”, after a slump in the suitor’s share price which impacted on the deal valuation.
Next Fifteen agreed the move last month after a number of other parties registered their interest, including M&C Saatchi shareholder Vin Murria.
The consultancy firm had offered 0.1637 of its own shares and 40p in cash for each M&C Saatchi share, in a proposal which valued the advertising and marketing firm at 247p a share. The deal required backing from 75% of shareholders in order to be approved.
However, M&C Saatchi said on Friday that it “unanimously recommends” shareholders do not vote in favour of the move at an upcoming court meeting.
READ MORE: Next Fifteen agrees £310m acquisition of M&C Saatchi
Next Fifteen’s share price has dropped by almost 30% since the deal was agreed, which M&C Saatchi said has resulted in a drop in the value of the takeover offer to 189p a share, based on the buyer’s price at the close of play on Thursday.
M&C Saatchi also told shareholders it believes both the Next Fifteen offer and the approach by Vin Murria’s investment vehicle, ADV, to be “inferior” than the company’s “standalone prospects”.
Nevertheless, the company added: “The M&C Saatchi directors have no certainty that the standalone prospects will be capable of being delivered in the way that they currently envisage.
“Recognising this, M&C Saatchi shareholders should be aware that when comparing only the Next Fifteen offer and the ADV offer, the M&C Saatchi directors consider the Next Fifteen offer to be superior to the ADV offer.”
Shares in the advertising company were 7% lower in early trading on Friday.
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