• by Joe Mandese  @mp_joemandese, December 15, 2023

A sale of agency tech startup Hudson MX is targeted to be completed in the second half of 2024, but it if fails to go through, long-time investor Ascential plc will nonetheless be required to exercise options to take control of what it describes as a potential liability in a document sent to shareholders.

“Even if an offer is received to acquire the Ascential Group’s investment stake in Hudson, the value realized in any subsequent sale may be materially lower than the financial investment and value attributed to Hudson by the Ascential Board,” the document discloses, adding: “This may in turn have an adverse effect on the Retained Ascential Group’s business, results of operations and overall financial condition. Retention of the Hudson interest may have a negative impact on the Ascential Group’s ability to pursue its future strategy, including the creation of a streamlined and focussed events business, and to create value for shareholders.”

The retained group means the assets Ascential will still own after selling its digital commerce operations to Omnicom for $900 million, including the Cannes Lions festival.

As part of the deal, Ascential said it will retain $80 million from the proceeds of the sale to cover a potential shortfall, but the disclosure sends another mixed signal on the outcome of Hudson MX, a once-promising startup that generated interest from the major agency holding companies as a potential challenger to the their dominant technology provider, Mediaocean.

As part of its deal with Omnicom, Ascential has disclosed that the holding company has agreed to participate “in the sales process” of Hudson MX, but neither Ascential nor Omnicom has disclosed exactly what that means -- other than the fact that Omnicom is not acquiring any of the equity of Hudson MX as part of the digital commerce assets it has agreed to buy from Ascential.

Among the scenarios is the notion that Omnicom might be helping to organize an effort for among one or more other holding companies to acquire Hudson MX and operate it as part of an independent joint venture, similar to an attempt by Omnicom and WPP to launch their Mediaport joint venture two decades ago.

That scenario has also sparked industry chatter that Mediaocean -- which previously made an offer to acquire Hudson MX that was rejected by its board -- might also be a likely suitor, if for no better reason than to stifle a potential holding-company joint venture.

In addition, Mediaocean likely would see some value in acquiring some of the assets, and especially the talent remaining in Hudson MX.

“There is no certainty that Ascential will be able to implement its future strategy regarding Hudson, and it may be obliged to acquire additional shares in Hudson,” Ascential says in its new disclosure, adding: “There can be no guarantee that Ascential will be able to dispose of its interest in Hudson at a later date. Following completion of the Sales, Ascential’s interest in Hudson will represent a materially greater proportion of the Retained Ascential Group than it represents of the Ascential Group today.”