The Special Committee of MDC Partners Inc. (“MDC” or the “Company”) responded today to highly misleading, inaccurate and false statements made by Indaba Capital (“Indaba”) in a press release dated July 13, 2021, concerning the business combination (the “Transaction”) between MDC and Stagwell Media LP (“Stagwell”).
“Indaba has grossly misrepresented the facts contained in the MDC proxy statement, seemingly to further Indaba’s extremely risky gambit of threatening to scuttle this highly attractive business combination as an attempt to extract more value,” said Irwin Simon, Chairman of the Special Committee of the MDC Board of Directors. “In reality, Indaba is simply wrong on most of the facts and its irresponsible and ungrounded assertions are putting this value-creating deal at risk and placing MDC shareholders and employees at both Stagwell and MDC in harm’s way.”
Indaba’s press release falsely asserts, for example, that the Stagwell parties and executives are receiving more than 180 million shares in the Transaction because of an “adjustment of 12 million shares … [as] compensation expense for ‘brand employees of Stagwell’ … [and] another approximately seven million shares to be issued to Stagwell managers.” In fact, as the pro forma financial statements in the prospectus makes plain, these 19 million shares are being granted by Stagwell from the 180 million shares that Stagwell will receive in the transaction and are not, in any way, in addition to the 180 million shares. And so, while Indaba breathlessly proclaims that Stagwell is receiving “almost $100 million” more than previously disclosed, Indaba is simply wrong, and its bold, but false, assertions threaten the completion of the Transaction on entirely specious grounds.
So too with the balance of Indaba’s assertions and the accompanying feigned shock. For example:
“The Special Committee and I recognize that Indaba would like a greater stake in the combined business,” continued Mr. Simon. “Shareholders should rest assured that the Special Committee fought hard to get as much from Stagwell as we could. But, we have a counter-party and there is a limit to what Stagwell is willing to do. Based on MDC’s current market price and the amended deal terms, Stagwell is now contributing its business at an implied valuation that is essentially in-line with MDC’s. We are at that limit.”
Mr. Simon concluded, “The July 26 vote is whether to accept this deal – one the Special Committee believes is very much in the interest of shareholders – or return to a standalone MDC which will remain highly levered. There is no other transaction with Stagwell or anyone else. Indaba’s false allegations and misrepresentations cannot change the reality that this transaction is terrific for MDC shareholders and represents their best chance to have a significant stake in a scaled company with a stronger balance sheet that operates in some of the fastest growing segments of the digital marketing and advertising sector.”
The Special Committee and MDC Board urge MDC shareholders to vote “FOR” the Transaction.
The Special Meeting of Shareholders to vote on the Transaction (the “Special Meeting”) will be held on Monday, July 26, 2021 at 11 AM ET, and can be accessed virtually at https://web.lumiagm.com/401933402. The Company will extend the scheduled proxy cut-off time for the Special Meeting and accept proxies and voting instructions, including electronic voting, until two business days prior to the time of the Special Meeting.
About MDC Partners Inc.
MDC Partners is one of the most influential marketing and communications networks in the world. As “The Place Where Great Talent Lives,” MDC Partners is celebrated for its innovative advertising, public relations, branding, digital, social and event marketing agency partners, which are responsible for some of the most memorable and effective campaigns for the world’s most respected brands. By leveraging technology, data analytics, insights and strategic consulting solutions, MDC Partners drives creative excellence, business growth and measurable return on marketing investment for over 1,700 clients worldwide. For more information about MDC Partners and its partner firms, visit our website at mdc-partners.com,