M&C Saatchi advertising & marketing assignments

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The second agency founded by what are still the world's most famous living ad men, M&C Saatchi built up a strong position for itself after its formation in 1995 when Maurice and Charles Saatchi were ousted from their first agency Saatchi & Saatchi in a bitter boardroom row. M&C rose to become one of the UK's foremost agencies, overtaking the original Saatchi business in domestic billings by the mid 2000s, and gradually establishing a global network which eventually spanned 31 cities in 24 countries. Much of this expansion was achieved organically or through local joint venture partnerships. The group has a particularly strong presence in the Asia Pacific region, considerably less so in the Americas, though this was bolstered in 2014 with a minority investment in New York agency SS+K. However, the performance of individual agencies has often been stormy. M&C Saatchi Australia is one of the group's biggest after the UK but was rocked in the 2010s by a succession of big account losses and equally big gains. More serious still were the problems encountered by M&C London. It lost its two biggest accounts in quick succession in early 2014, followed by an ill-conceived overhaul of local management. That proved disastrous, and it took several years for the group flagship to recover stability under a new team. Billings have yet to recover. Ranked as the UK's 3rd largest agency in 2007, it had slipped out of the Top 20 by 2015. A tentative recovery was followed by an even more dramatic decline in performance in several markets in 2019 and an accounting investigation. Together these two factors promoted a dramatic plunge in M&C's share price, which halved in the space of just a single month, before being suspended. As turmoil raged within the group in December 2019, Maurice Saatchi resigned as an executive director of the group, apparently after a row with his fellow directors over strategy, and he was followed by the CEO and chief creative officer of the London agency. The group spent almost a year attempting to resolve its various issues, but appeared to have turned a corner by late 2020, despite the additional impact of the pandemic. The three remaining founding partners - executive chairman Jeremy Sinclair, group CEO David Kershaw and executive director Bill Muirhead - announced their retirement from the group at the end of the year. Moray MacLennan was named as the new group CEO. Camilla Kemp is chief executive of the UK agency. For 2019, the group reported net revenues of £256m - a best-ever figure - but a net loss of £11.8m. Net revenues fell back to £225m in 2020, largely as a result of the Covid pandemic, but net loss improved slightly to £9.9m. There was a strong improvement in 2021 to net revenues of £249m and a best-ever profit before tax of £21.6m. Net profit was £13.2m. The UK agency remains the engine room of the business, despite its recent problems, and contributed 42% of net revenues in 2021. Australia was the next biggest region at 22% of revenues. In 2022, M&C's biggest shareholder, investor Vin Murria, launched an offer to acquire the business. A series of adjusted offers were rejected by the M&C board. Eventually, a rival offer from UK-based group Next 15 was accepted in May 2022. Vin Murria was removed from the M&C board shortly thereafter. However, a decline in Next 15's share price subsequently prompted the M&C board to withdraw its support for the bid. The matter will now be decided in August by shareholders, who will vote whether to acept either of the two bids or remain independent. For 2021, Nielsen (in Campaign) estimated billings for the UK agency of of £66m, ranking the agency as the local #25. Traditionally, the group has also operated a network of satellites in the UK offering more diversified services such as PR, mobile marketing, CRM and so on. The biggest of these, Walker Media, was sold in 2013 to Publicis, becoming Blue 449. Several others, including CRM agency Lida, were absorbed into the main agency in 2020. The group also reduced its international exposure, cutting its investments in some European outposts, including M&C Saatchi GAD France, now a joint venture with Australie.

Capsule checked 9th July 2021

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Recent stories from Adbrands Update:

Adbrands Update 20th Jun 2022: The battle for M&C Saatchi took a new turn after the agency's board withdrew its recommendation of Next 15's takeover. The latter's share price has dropped by more than a quarter as a result of investor concerns combined with global turmoil in the markets, significantly reducing the value of its original offer for M&C. This was worth around 247p per share a month ago, but the decline in Next 15's own share price has reduced this to around 189p per share.

Adbrands Update 20th May 2022: In an extraordinary development, M&C Saatchi has agreed a sale to UK marketing group Next 15 for £310m, trumping Vin Mriia's AdvancedAdvT. If the deal is completed, it will represent a spectacular new expansion for Next 15, which has only recently completed its acquisition of Engine UK.

Adbrands Update 18th May 2022: Vin Murria made a revised offer, and its first formal bid, to acquire M&C Saatchi at for 207.5p per share, equivalent to a total valuation of £253.6m. The M&C board rejected the offer immediately, calling it "derisory" and saying it continues significantly to undervalue the business. The latest offer is even lower than previous informal offers, the highest of which, in February, proposed 230p per share.

Adbrands Update 3rd May 2022: M&C Saatchi reported strong results for 2021 and took the unusual step of releasing profit projections for both the current year and 2023. Net revenues for 2021 were £249.3m, while pre-tax profits hit a record high of £21.6m. On a like-for-like basis, the latest results suggest organic growth of 15.1%, higher than any rival marketing groups. M&C forecasts profit of £31m for the current year and £41m for 2023. "These forecasts evidence the future potential of the business, comprising expected revenue growth from existing clients and new client wins, coupled with further simplification under the accelerated company strategy," said the board in a statement. The figures put further pressure on bidder Vin Murria to either increase her current offer for the business to a more realistic level or withdraw.

Adbrands Update 24th Jan 2022: Vin Murria has made another tilt at M&C Saatchi, increasing her takeover offer. The new bid values M&C at £265m, and is notionally worth around 220p per share in a merged M&C Saatchi/AdvancedAdvT entity, or a lower value of 200p with a small cash payout. Current shareholders would be significantly diluted by the allocation of preference shares to Murria and her private equity backers. M&C's independent directors have again rejected the bid, saying it continues to undervalue the business, which was trading at 330p per share in 2019. Most onlookers retain doubts about what value Murria and her team bring to an advertising business given their background in business management software.

Adbrands Update 10th Jan 2022: M&C Saatchi's board rejected a takeover offer presented by its biggest shareholder Vin Murria. She has proposed a "share exchange merger" of M&C with her investment company AdvancedAdvT. The proposal claims that: "Combined with a focus on a data, analytics and digital creative marketing strategy plus M&A, [the merger] would enable the enlarged group to capitalise on the heightened opportunity to 'navigate, create and lead meaningful change' whilst guiding companies on their new digital journey." However the proposal was dismissed out of hand by M&C's independent directors, who responded, with some justification, that: "This all-share proposal does not articulate an alternative strategy for the benefit of the company's stakeholders beyond an initial change of control of M&C Saatchi."

Adbrands Update 6th Jan 2022: Tech entrepreneur Vin Murria is launching a bid to acquire control of M&C Saatchi via acquisition vehicle AdvancedAdvT Ltd. Murria was already the largest shareholder in the business with around 12.5% of equity, and AdvancedAdvT acquired a further 10% earlier this week through the open market. A further move is anticipated imminently. M&C Saatchi has confirmed the development, commenting "No proposal has been received but the Board has been told to expect one in the near term."

Adbrands Daily Update 22nd Sep 2021: M&C Saatchi's recovery continues apace. Figures for the first half of 2021 showed a 14% increase in net revenues to £118m, while net profits jumped fivefold to £4.0m. Like-for-like revenue growth was 21% for the period. The UK remains the main engine for the business, accounting for almost half of revenues and essentially all profits. The Asia & Australia region came next at almost a quarter of revenues. The group identified growth in the US as one of its main targets for this year. The Americas contributed around 15% of revenues for 1H 2021.

Adbrands Daily Update 30th Jun 2021: M&C Saatchi finally reported long-delayed results for 2020. The figures were better than might have been expected given the group's recent troubles. Net revenues fell back to £225m (from a best-ever £256m the year before) but net losses improved slightly to £9.9m (from £11.8m). The group cut its global footprint, with 20 offices closed, merged or divested. It also reported strong performance for the year so far.

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