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MDC Partners and Stagwell to Combine, Creating Transformative Global Marketing Network

Combined company poised to deliver meaningful shareholder value creation, accelerated growth and enhanced services to clients.

Combination unleashes the power of talent and technology around the world to create a top ten global integrated marketing services company that will provide the best-in-class solutions that marketers need to thrive in today’s marketplace.

More than triples the contribution of high-growth digital services and expertise compared to MDC standalone.

Existing MDC common shareholders (including Stagwell) will receive 26% of the common equity of the combined company and Stagwell will receive share consideration equal to 74% (excluding Stagwell’s pre-transaction holdings of MDC common shares and without giving effect to any conversion of outstanding preference shares).

Complementary offerings have the potential to produce 5%+ annual organic revenue growth, decrease net leverage from 4.2x to 3.4x and deliver over $200 million of pro forma cash generation in 2021.

Run-rate cost savings of ~$30 million from operational efficiencies and integrated services over time, with 90% expected to be achieved within 24 months.

Plans to invest in expanding services across global markets and in expanded digital marketing products.

MDC Board of Directors has approved the Transaction, following a recommendation by a Special Committee of independent directors.

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MDC Partners and Stagwell Media announced that they have entered into a definitive transaction agreement to combine their respective businesses, uniting the award-winning talent of MDC with the advanced technology platform of Stagwell to create the transformative marketing company today’s marketplace demands. Together, the companies will significantly expand their range of best-in-class capabilities, depth of expertise, and geographic footprint to deliver expanded value to clients, and meaningfully accelerate the combined company’s growth.

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“This is a new day for MDC and Stagwell,” said Mark Penn, Chairman and CEO of MDC Partners, and Managing Partner of The Stagwell Group. “Together, they unleash precisely the right talent and technology to create a transformative marketing services company offering scaled Creative Performance. MDC is celebrated for bringing award-winning creative firepower to the world’s leading and most ambitious companies, and Stagwell has been built with deep and sophisticated technology at its core. Unencumbered by legacy structures or assets, the combined company will have the integrated, modern offerings marketers deserve, and the resources to invest meaningfully in our global capabilities, our talent, and our clients’ future.”

The combined company will provide the balance of integrated solutions that modern marketers need to succeed, including second-to-none creativity and communications, scaled media and data capabilities, superior consumer insights, technology development and innovation, and digital transformation.  Without giving effect to any conversion of outstanding preference shares, the pre-Transaction holders of MDC Class A and Class B shares (“MDC Shares”) would receive 26% of the common equity of the combined company and Stagwell would receive share consideration equal to 74% of the common equity of the combined company (excluding Stagwell’s ownership in the combined company derived from its ownership of pre-Transaction MDC Shares), each on a pro forma basis.  Stagwell and its affiliates are expected to hold approximately 79% of the common equity of the combined company immediately after closing of the Transaction (assuming no conversion of outstanding preference shares of MDC).

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With over 8,600 employees across 23 countries, the combined company will be ideally suited to lead marketers into the future, with deepened expertise in digital services, and more than tripling high-growth digital offerings to 32% of the combined business. With a track record of collaboration across disciplines bringing the right technology solutions to its blue-chip clients’ business and marketing challenges, the combined company’s network also brings experience in building and developing its own proprietary digital products to solve for gaps in the marketing ecosystem, which together could generate $90 – $150 million annual top-line benefit over time.

“Having thoroughly evaluated the Transaction – and having received the recommendation of the Special Committee, which, in close collaboration with its independent legal and financial advisors, met extensively to assess, evaluate and negotiate the Transaction – we are pleased to have reached a definitive agreement that maximizes growth potential for MDC and opportunity for all stakeholders,” said Irwin D. Simon, Presiding Director of MDC Partners and Chair of the Special Committee of MDC Partners’ Board of Directors. “MDC boasts a rich history and culture of entrepreneurship while innovating to solve for core client and industry needs. Combining these two companies will build on that legacy to create an even stronger industry leader.”

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