MDC Partners wants to get rid of its Canadian baggage once and for all.
The company was founded in Toronto in 1986 by Miles Nadal, who treated it like his own piggy bank — even after the ad firm went public a short time later.
The now-disgraced Nadal was drummed out of the company in 2015 amid an accounting scandal at the firm, which led to investigations by U.S. Department of Justice and the Securities and Exchange Commission. He agreed to pay millions in bogus expenses and unearned bonuses back to the firm.
Now, the company wants to put its Canadian connection behind it. Ahead of the proposed (and almost sure to be approved) merger with Stagwell Partners, MDC has filed with the SEC to shift its incorporation locale from Canada to Delaware.
The firm said it believes the U.S. “domestication” will better reflect its U.S.-focused operations. Shareholders would have to approve the shift once the SEC signs off on it.
MDC CFO Frank Lanuto stated: “Becoming a U.S.-domiciled company is part of our overall plan to reduce organizational complexity and duplicative administrative costs. We believe this will make investing in our securities more desirable, including for investors limited to securities of U.S.-domiciled companies, as well as better align us with our U.S. peers.”
The company’s stock price plummeted in the wake of the Nadal scandal and never fully recovered. It’s been languishing in the low-to-mid single digits for several years.
In June, Stagwell, led by founder Mark Penn,who is also a shareholder and CEO of MDC Partners, issued a merger proposal to MDC. That proposal is currently being evaluated by a special committee created by the MDC board and several outside advisors it hired to help with the assessment.
MDC Partners agencies include 72andSunny, Assembly, Anomaly, Forsman & Bodenfors and others.