MDC Partners said today that its board of directors has formed a special committee of independent directors to review a proposal made by Stagwell Media to merge with MDC.
Stagwell’s proposal was released yesterday after the close of the markets.
MDC’s stock price more than doubled in Friday morning trading to $2.63.
Mark Penn is founder of Stagwell and last year invested $100 million in MDC Partners and also joined as company CEO.
MDC said its special committee intends to retain legal counsel and an independent financial advisor to assist in its review and evaluation of the potential transaction.
A letter proposing the combination was delivered to the MDC board yesterday. According to Stagwell the combined entity would have generated over $2 billion in net revenue in 2019.
“Stagwell believes the combined company would deliver a superior value proposition to clients, enhance shareholder value, create attractive synergy opportunities and enhance the pro forma credit profile through strong free cash flow generation,” the company stated.
The Stagwell proposal values MDC Class A stock at $4.25 per share on a fully diluted basis and implies a premium of 263% to MDC's closing price of $1.17 per share on June 24. MDC shareholders would own 18.5% of the combined company on a pro forma basis, per the proposal.
"I am excited about the potential combination of MDC Partners and Stagwell and expect the combined company will deliver meaningful shareholder value creation, accelerated growth and enhanced services to clients," stated Penn.
J.P. Morgan is acting as exclusive financial advisor and Freshfields Bruckhaus Deringer LLP is acting as legal advisor to Stagwell in connection with the proposal.