WASHINGTON: Stagwell Group has proposed a merger with MDC Partners to form a company with more than $2 billion in 2019 net revenue.
A letter proposing the combination was delivered to MDC’s board of directors on Thursday. Stagwell said in a statement that the combined company would deliver “a superior value proposition to clients, enhance shareholder value, create attractive synergy opportunities and enhance the pro forma credit profile through strong free cash-flow generation.”
The proposed company would see $35 million in synergies from the deal, according to the statement. JP Morgan is financial adviser and Freshfields Bruckhaus Deringer is legal adviser to Stagwell on the proposal.
Mark Penn became MDC's CEO in 2019 after Stagwell invested $100 million in the company. He is also managing partner of the Stagwell Group.
Stagwell’s agencies include Code and Theory, ForwardPMX, Grason, Harris Insights & Analytics, HarrisX, Ink, Locaria, MMI Agency, Multiview, National Research Group, Observatory, Reputation Defender, Scout, SKDKnickerbocker, Stagwell Tech, Targeted Victory and Wye Communications. Penn founded Stagwell Group in 2015 with initial investment capital of $250 million.
In December, MDC Partners formed an agency network bringing together U.S. creative shop Doner with six complementary specialist firms in North America, including PR firms KWT Global and HL Group, which merged on June 1. Separately, Stagwell also owns a minority stake in Finn Partners.
In February, Stagwell Group hired IBM and Ford alum Ray Day as vice chair of its marketing and communications agencies.
MDC Partners’ Q1 revenue improved by 2% on an organic basis from the year prior to $327.7 million.