In the face of mounting opposition by MDC shareholders to the proposed merger with Stagwell, the latter has notified the special MDC board committee reviewing the deal that it is willing to amend terms that would represent what it called “an obvious and material improvement for MDC shareholders.”
But major MDC investor Indaba Capital Management didn't see it that way, indicating that Stagwell's proposed modifications were inadequate, according to a company representative.
Late last month, San Francisco-based Indaba, one of the largest MDC shareholders said it was voting against the merger as currently structured, saying it didn't provide “anything close to fair consideration to shareholders.” Since then other shareholders have also voiced concerns.
For now Indaba says it still intends to vote against the merger, even though Stagwell noted in a press release today that the proposed modifications as stated in the letter to the MDC board committee constitute a final offer.
Shareholders are scheduled to vote on the merger proposal on June 22.
Over the weekend Stagwell informed the special committee—by way of a letter to committee head Irwin Simon--that it was willing to give up more than $100 million in value to get the deal done.
That said Stagwell insisted in its letter that the current proposal is fair. “Nevertheless, sometimes for the sake of expediency, it makes sense to depart from what is fair and reasonable to overcome the practical considerations that might slow us down,” Stagwell wrote in the letter which was signed by founder Mark Penn, who is also Chairman and CEO of MDC.
The letter couched the possible amendments as modifications that “Stagwell might reasonably accept if it moved the deal to a prompt and speedy conclusion with unquestioned and broadened support.”
Stagwell said it would give up 20 million common shares and make other concessions that would take the equity split to approximately 70% for Stagwell and 30% for MDC shareholders.