Ascential Reveals Shareholders Could Pay As Much As $170M For Hudson Investment

Hudson MX backer Ascential plc has invested a total of $90 million to date in the agency tech startup, and based on terms disclosed in an update to its shareholders this week, that could swell to as much as $170 million.

Ascential made the disclosures as part of an announcement that Hudson MX’s board has initiated its sale and that Omnicom has agreed to participate in it in some undisclosed way.

Currently, Ascential owns a 36.5% stake in Hudson MX, private equity investor MT II Holdings owns 51%, and common shareholders including Michael Kassan, his son Alexander Kassan and former Hudson MX CEO and current U.S. Soccer Federation Secretary General JT Batson and presumably others own 12.5%.

But as part of this week’s disclosures, Ascential said it is retaining $80 million from two other deals announced this week – the sale of Flywheel Digital to Omnicom and the sale of product design unit WGSN to an investment fund – to cover “any shortfall” it might be obligated to pay MT II Holdings as part of a Hudson MX restructuring deal it announced in February.

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Notably, Ascential CEO Duncan Painter, who plans to join Omnicom as head of its Flywheel operations after that deal closes, also is on Hudson MX’s board.

“Crazy,” is how one knowledgeable observer commented after reviewing Ascential’s disclosures, noting, “Ascential is holding back $80 million on their balance sheet from these sales to cover [MT II Holdings]. Which means, they believe there is a decent likelihood they will have to fund it all.  Which means, Ascential investors would have lost a total of $170 million on Hudson MX.”

While Omnicom’s explicit role in the sale of Hudson MX remains unclear, it – as well as the other major agency holding companies – continue to be interested in seeing an alternative emerge to compete with industry-dominant agency technology provider Mediaocean.

However, it also is not clear what a new owner – or group of owners – would be willing to pay for Hudson MX, given that Ascential also disclosed the startup recorded a lost before tax of $32.7 million for the year ended 2022, and estimated its gross asset value of $119.2 million through June of this year.

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