MDC Partners Shareholders Approve Merger with Stagwell
Originally posted in PRWeek by Betsy Kim
NEW YORK: MDC Partners shareholders voted to approve the agreement to combine with Stagwell Group following a shareholder dispute.
Following the anticipated August 2 closing, the combined company will be renamed Stagwell Inc and traded on the Nasdaq stock exchange. Post-merger, the company will have 10,000 global employees.
Mark Penn will serve as chairman and CEO of Stagwell Inc., with executives from both networks on the management team. In 2019, he became MDC's CEO after Stagwell Group invested $100 million in the company. Four years earlier, Penn founded Stagwell Group with a $250 million initial investment.
The newly combined company plans to expand global services and digital marketing products.
The deal almost derailed in May. Indaba Capital Management, one of MDC Partners' largest shareholders, owning 12% of MDC stock, opposed the proposed merger, claiming the terms unfairly favored Stagwell investors.
Indaba asserted that the proposal to grant MDC shareholders 26% ownership of the combined company was insufficient, and that MDC shareholders should instead receive a 37.5% to 40% share.
The approved deal now grants 31% of stock to MDC shareholders and 69% to Stagwell owners.
The combined company will include 72andSunny, Harris Poll, YML, Anomaly and other agencies in its portfolio. It’s expected to earn about $2 billion in 2021 revenue and more than $350 million in adjusted EBITDA, making it a top 10 global marketing services company.
Stagwell’s agencies also include Code and Theory, ForwardPMX, Grason, HarrisX, Ink, Locaria, MMI Agency, Multiview, National Research Group, Observatory, Reputation Defender, Scout, SKDKnickerbocker, Stagwell Tech, Targeted Victory and Wye Communications. Finn Partners bought back a minority share that Stagwell held in the company this year.
In December 2019, MDC Partners formed an agency network bringing together U.S. creative shop Doner with six complementary specialist firms in North America, including PR firms KWT Global and HL Group, which merged last year. MDC’s other PR firms include Allison+Partners and Hunter.