Suitors line up bids for troubled ad agency M&C Saatchi
Hedge funds and private equity firms are said to be lining up bids for M&C Saatchi as the City prepares to pounce on the embattled advertising agency.
Asset management firm Dbay Advisors, which took a controlling stake in Eddie Stobart in December, and Exponent, which owns publishing firm Dennis, are among the suitors circling the agency.
Any successful bidder would look to install new management in a bid to stabilise the company, the Sunday Times reported.
Shares in M&C Saatchi plunged in December after the firm issued a major profit warning and revealed an £11.6m hole in its finances.
The scandal prompted the resignation of Lord Maurice Saatchi, who founded the advertising stalwart. Fellow Conservative grandee Lord Dobbs, Prince Charles’ former private secretary Sir Michael Peat and media banker Lorna Tilbian also stepped down from the board.
Yougov chairman Roger Parry is also said to have canvassed potential backers as part of a separate plan to overhaul the group’s management.
However, existing investors are thought to be unlikely to agree to any deal to take M&C Saatchi private. Shares in the company are now trading at roughly 71p, down from 365p a year ago.
One potential plan for a buyer would be to team up with other investors to oust chief executive David Kershaw, chairman Jeremy Sinclair or executive director Bill Muirhead, according to the report.
Kershaw has previously offered to resign over the crisis, but was told this was not in the company’s interest.
The accounting blunder has sparked a major row at the top of the company, with disgruntled investors accusing management backtracking on a promise to hold an internal investigation. The Financial Contact Authority has since launched its own probe.
Analysts have warned that the company’s accounting troubles and its complicated corporate structure could serve as a barrier to a takeover. Any deal is also unlikely to be agreed until markets have recovered from the coronavirus outbreak.
In January M&C Saatchi named former Imperial Brands chief executive Gareth Davis as deputy chairman. The firm also tapped media veteran Colin Jones to chair its audit committee.
M&C Saatchi and Dbay Advisors declined to comment. Exponent has been contacted for comment.