MDC Partners confirmed Monday that it received revised merger terms from Stagwell Media in a bid to appease shareholders unhappy with the original offer.
The new terms include a decrease in the share consideration that Stagwell would receive in the deal by about 31 million common shares, versus the initial agreement.
MDC is valued at approximately $1.7 billion, and the new share split would give MDC common shareholders approximately 30% stake in the company and Stagwell 70%.
The MDC board committee evaluating the proposed merger said it and its advisors “will move quickly to review and evaluate Stagwell’s proposal in order to make a recommendation to MDC shareholders as soon as practicable with respect to the revised offer.”
MDC Shareholders are scheduled to vote on the merger June 22.
But the revised offer is unlikely to mollify major MDC shareholder Indaba. When Stagwell hinted last week it might be willing to amend its offer, the investor said a 30-70 split would be unacceptable. Later on Monday Indaba confirmed that was the case.
In an SEC filing today, Stagwell listed several reasons why MDC shareholders should disregard Indaba’s analysis, including the assertion it “unreasonably values Stagwell at a discount to MDC.”
It also noted MDC has been in play for years with no offers from anyone other than Stagwell, and that the merger would provide MDC with crucial digital offerings it lacks, but which are critical to its future growth.
Monday evening Indaba issued a statement indicating Stagwell's latest offer was insufficient and that it planned to vote against the merger.
Derek Schrier, Managing Partner of Indaba, commented:
"It is important to underscore that the unsolicited feedback we have received from our fellow shareholders paints a different picture than the one Stagwell shared today. Large shareholders seem to share our concerns regarding the conflicts and fire sale terms hanging over this deal. It is not lost on them that [MDC and Stagwell head Mark] Penn stands to benefit greatly from a transaction that deprives shareholders of fair value.
We believe many shareholders support the proposed combination. With this context in mind, we contend that even supportive shareholders want to be fairly compensated beyond the 30% share consideration proposed today. If Stagwell wants to come to the table and have a good faith discussion with us, we would be willing to work towards a mutually-agreeable resolution and consider signing a voting agreement. But we will not vote to support a transaction that includes unreasonable and unfair terms.”
This story has been updated.