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Is There More To Go In The Bid Fight For M&C Saatchi?

Trade SAA Shares Your Capital Is At Risk
Updated 20 May 2022

Key points:

The fight for M&C Saatchi (LON: SAA) shares continues as the AdvancedAdvT bid is rejected and Next Fifteen Communications comes in with another bid at 247.5 pence. The Saatchi share price is currently at 214 p which means that there’s considerable room for a profit – if that latest bid goes through. There’s also, of course, the idea that Vin Murria and the AdvancedAdvT team come back with yet another offer.

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As we reported the M&C Saatchi bid story started when Vin Murria made a preliminary offer back in January. There was stake building and then that tentative approach about an offer for the whole company. As we said back then “M&C Saatchi is definitely in play now the interesting part is going to be how long the game will run.”

It’s been running since then. The latest Advanced AdvT offer was on the 17th May, updating their 3 Feb one. This offered 2.043 new shares plus 40 pence for each Saatchi. Or, 2.530 new shares for each old.

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This was met with an insistence by M&C Saatchi that this was much too low, don’t be ridiculous and so on. At which point we come to today’s offer, from Next Fifteen. This offers 0.1637 of a Next Fifteen share plus 40 pence cash for each M&C Saatchi. This has a current value of 247.2 pence against a market price for Saatchi of 214p and even that’s up 30% this morning and looks to be still rising.

What matters is what happens next of course. There’s still that gap and fresh air between the latest offer and the current price. That could close over the course of the morning. There’s also the possibility of a further come back and new bid from Vin Murria and vehicle. Or, obviously enough. Murria and team might think they’ve made a decent and substantial profit on their original stake (AdvancedAdvT and Vin Murria own 22.3% of M&C Saatchi plc's issued share capital.) and decide to collect.

One thing that hasn’t happened yet is any significant decline in the share price of either AdvancedAdvT or Next Fifteen. If the market thought either of them were even close to overpaying then there would be. So, that means that the market as a whole seems to think that there’s more value in M&C Saatchi than the current share price.

Which is odd, because if this were the entire market view then Saatchi would be above the Next Fifteen bid price already.

Any trading position should be determined by views on what happens next. Do Murria and team come back with another bid? Or do they collect their profit and walk? It’s possible to think that buying into Saatchi at anything less than the Next Fifteen bid of 247 pence is a banked profit – but don’t forget that depends upon the Next Fifteen share price staying where it is.