LONDON BRIEFING: Next Fifteen steps into M&C Saatchi takeover battle

(Alliance News) - Digital marketing services firm Next Fifteen Communications on Friday muscled ...

Alliance News 20 May, 2022 | 7:24AM
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(Alliance News) - Digital marketing services firm Next Fifteen Communications on Friday muscled into the tussle over advertising agency M&C Saatchi by making a GBP310.1 million cash-and-shares offer.

The company is offering 0.1637 of a Next Fifteen share and 40 pence in cash for each M&C Saatchi share, valuing M&C Saatchi shares at 247.2p each.

This deal represents a 48% premium to M&C Saatchi's closing price of 167.5p on January 4, the last business day before London-listed acquisition vehicle AdvancedAdvT said it has taken a minority stake.

M&C Saatchi shares were up 33% early Friday at 219.16p.

M&C Saatchi was already the target of a hostile takeover attempt by AdvancedAdvT. Under AdvancedAdvT's most recent offer, shareholders in M&C Saatchi will for each share held either receive 2.043 new shares in AdvancedAdvT and 40 pence in cash, or receive 2.530 new AdvancedAdvT shares.

At the time the offer was made, this valued each share of M&C Saatchi at 207.5 pence and GBP253.6 million in total. However, M&C Saatchi rejected the offer, calling it "derisory".

Instead, the board is recommending Next Fifteen's takeover offer and urged shareholders to take no action in respect of AdvancedAdvT's offer.

For its part, Next Fifteen on Friday said: "The board of Next Fifteen believes the acquisition has strong strategic and financial rationale. This is a highly compelling opportunity to combine Next Fifteen and M&C Saatchi and establish a truly global platform in the digital marketing and consulting sectors, a platform that leverages top-flight creativity, technology, data, business consulting and digital marketing to deliver meaningful change for the enlarged client base."

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.

AdvancedAdvT, in response to the Next Fifteen offer, said it is "considering its options". The company added that it and Executive Chair Vin Murria together own just over 22% of M&C Saatchi's share capital. Murria also is a director of M&C Saatchi.

Next Fifteen shares were down 0.8% early Friday, while AdvancedAdvT shares were up 9.2%.

Here is what you need to know at the London market open:

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MARKETS

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FTSE 100: up 1.4% at 7,402.52

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Hang Seng: up 2.6% at 20,652.73

Nikkei 225: closed up 1.3% at 26,739.03

S&P/ASX 200: closed up 1.2% at 7,145.60

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DJIA: closed down 236.94 points, 0.8%, at 31,253.13

S&P 500: closed down 0.6% at 3,900.79

Nasdaq Composite: closed down 0.3% at 11,388.50

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EUR: down at USD1.0581 (USD1.0590)

GBP: down at USD1.2476 (USD1.2503)

USD: up at JPY127.74 (JPY127.40)

Gold: soft at USD1,848.03 per ounce (USD1,848.44)

Oil (Brent): up at USD111.39 a barrel (USD110.05)

(changes since previous London equities close)

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ECONOMICS AND GENERAL

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Friday's key economic events still to come

1600 CEST EU flash consumer confidence indicator

1000 EDT US advance quarterly services

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UK retail sales fared better-than-hoped in April against a backdrop of weakening consumer confidence. Retail sales volumes rose 1.4% in April on a month before, figures from the Office for National Statistics showed, reversing a month-on-month fall of 1.2% in March. This was driven by food store sales, which rose 2.8%, largely due to higher spending on alcohol, tobacco and confectionery in supermarkets. Consensus, according to FXStreet, had anticipated a decline of 0.2% in April. Heather Bovill, deputy director for Surveys & Economic Indicators at the ONS, noted that along with an uplift for supermarkets, off-licenses also reported a boost, "possibly due to people staying in more to save money". While retail sales picked up in April, she cautioned that the figures "still show a continued longer term downward trend". Year-on-year, sales tumbled 4.9% in April, after growth of 1.3% in March. However, this was not as bad as the 7.2% drop forecast by analysts.

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GfK said its long-running UK consumer confidence monitor dropped by two points to minus 40 in May, the lowest score since records began in 1974. "May's result is one point lower than the previous record set in July 2008 when the headline score plunged to -39. This means consumer confidence is now weaker than in the darkest days of the global banking crisis, the impact of Brexit on the economy, or the Covid shutdown," said Joe Staton, client strategy director at GfK. In May 2021, the figure stood at just minus 9. "Even the Bank of England is pessimistic, with Governor Andrew Bailey this week offering no hope of tackling inflation," said GfK's Staton. "The outlook for consumer confidence is gloomy, and nothing on the economic horizon shows a reason for optimism any time soon."

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BROKER RATING CHANGES

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Deutsche Bank cuts Royal Mail price target to 240 (275) pence - 'sell'

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Berenberg cuts Royal Mail price target to 575 (650) pence - 'buy'

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Deutsche Bank cuts Marshalls to 'hold' (buy) - price target 629 (885) pence

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COMPANIES - FTSE 100

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Croda International backed its full-year forecasts following a strong start to 2022 which saw the firm "successfully" mitigate inflation pressures. The specialty chemicals firm said demand was particularly strong in North America and Asia. "Notably, April sales in China were ahead of the prior year despite local Covid-19 lockdowns," said Croda. By division, Consumer Care has seen strong demand, while there was also good growth in Beauty Actives, Beauty Care and Home Care. Croda said it has seen "continued sales and profit growth" in the year-to-date.

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COMPANIES - FTSE 250

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Merchant bank Close Brothers reported third-quarter loan book growth. In Banking, its loan book increased 1.8% in the quarter to GBP8.8 billion from GBP8.6 billion at the end of January, notching year-to-date growth of 3.7%. The firm said it is yet to see a "direct impact of the deteriorating economic conditions", but noted that the year-to-date bad debt ratio increased marginally to 1.2% from 1.1% at the half-year stage. "Client assets reduced in Close Brothers Asset Management, reflecting negative market movements, and Winterflood saw an improvement in trading income," said Close Brothers.

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COMPANIES - SMALL CAP

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E-commerce platform THG confirmed that it has received and rejected a third non-binding takeover proposal from Belerion Capital Group and King Street Capital Management, on the grounds that the offer "significantly undervalues" the company, it said late Thursday. The Belerion consortium made a proposal of 170 pence per share for the online beauty products seller, and has until 1700 BST on June 16 to make a firm offer or pull out. Belerion is an e-commerce and technology focused private equity firm, while King Street Capital is an alternative asset manager. Also Thursday, Luxembourg-based venture capital firm Candy Ventures owned by Nick Candy said that it is in "very early stages" of considering a possible offer for THG.

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COMPANIES - GLOBAL

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Compagnie Financiere Richemont reported a surge in annual profit and revenue, with double-digit sales growth across all business areas, regions, and channels. The Swiss luxury goods firm reported pretax profit of EUR2.58 billion in the year ended March 31, up 70% from EUR1.51 billion the previous year. Revenue improved by 46% to EUR19.18 billion - an all-time high, Richemont said - from EUR13.14 billion, with double-digit growth across all business area, regions and channels. Momentum is particularly noted in retail and the Americas. Sales in the Americas grew 77% against the previous year, followed by the Middle East & Africa with 53% growth and Europe with 51%.

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Friday's shareholder meetings

Bank of Cyprus Holdings PLC - AGM

Croda International PLC - AGM

Deliveroo PLC - AGM

Georgia Capital PLC - AGM

Hikma Pharmaceuticals PLC - EGM re capital reduction

Keywords Studios PLC - AGM

Real Estate Investors PLC - AGM

Reckitt Benckiser Group PLC - AGM

Resolute Mining Ltd - AGM

Restore PLC - AGM

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By Tom Waite; thomaslwaite@alliancenews.com

Copyright 2022 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
M&C Saatchi PLC 156.00 GBX -2.50 -
Marshalls PLC 444.00 GBX -0.89 -
Royal Mail PLC 270.30 GBX 0.22 -
Next Fifteen Communications Group PLC 905.00 GBX 0.56 -
AdvancedAdvT Ltd Ordinary Shares 77.50 GBX 0.00 -

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