Next Fifteen Comms. Offer for M&C Saatchi plc

RECOMMENDED CASH AND SHARE ACQUISITION

OF

M&C SAATCHI PLC

BY

NEXT FIFTEEN COMMUNICATIONS GROUP PLC

TO BE EFFECTED BY MEANS OF A SCHEME OF ARRANGEMENT UNDER PART 26 OF THE COMPANIES ACT 2006

Summary

The Board of Next Fifteen Communications Group plc (“Next Fifteen”) and the M&C Saatchi Independent Directors are pleased to announce that they have reached agreement on the terms of a recommended cash and share acquisition by which the entire issued and to be issued ordinary share capital of M&C Saatchi plc (“M&C Saatchi”) will be acquired by Next Fifteen, to be effected by means of a court sanctioned scheme of arrangement between M&C Saatchi and the M&C Saatchi Shareholders under Part 26 of the Companies Act 2006 (the “Acquisition”).

Under the terms of the Acquisition, holders of M&C Saatchi Shares will be entitled to receive:

The Acquisition values each M&C Saatchi Share at 247.2 pence (the “Acquisition Price”) and the entire issued and to be issued ordinary share capital of M&C Saatchi at approximately £310.1 million on a fully diluted basis (the “Acquisition Value”) based on the Closing Price per Next Fifteen Share on the Last Practicable Date of 1,266.0 pence.

The Acquisition Price represents a premium of approximately:

The Acquisition Value represents:

Following completion of the Acquisition, M&C Saatchi Shareholders will own approximately 17.3 per cent. of the Enlarged Group on a fully diluted basis.

The M&C Saatchi Independent Directors are recommending the terms of the Acquisition and consider it superior to the terms of the ADV Offer which they have unanimously rejected. Accordingly the M&C Saatchi Independent Directors urge M&C Saatchi Shareholders to take no action in respect of the ADV Offer.

The M&C Saatchi Independent Directors recognise the strong support for the Acquisition from amongst its key senior employees, including members of M&C Saatchi's Executive Committee (“Excom”) (consisting of 18 individuals who lead the key business lines responsible for M&C Saatchi's revenue), who have met with Next Fifteen and have expressed unanimous support for the Acquisition and the potential for the Acquisition.

If M&C Saatchi announces, declares or pays any dividend or any other distribution to M&C Saatchi Shareholders on or after the date of this Announcement, Next Fifteen reserves the right to make an equivalent reduction in the terms of the Acquisition.

Background to and reasons for the Acquisition

The Board of Next Fifteen believes the Acquisition has strong strategic and financial rationale. This is a highly compelling opportunity to combine Next Fifteen and M&C Saatchi and establish a truly global platform in the digital marketing and consulting sectors, a platform that leverages top-flight creativity, technology, data, business consulting and digital marketing to deliver meaningful change for the enlarged client base. Next Fifteen's four segments, Customer Insight, Customer Engagement, Customer Delivery and Business Transformation, represent a £1 trillion revenue global market opportunity.

Next Fifteen's vision is to build a growth consultancy that combines specialist capabilities with global scale. The Board of Next Fifteen believes that the successful business models for the foreseeable future will be purpose-driven, driving meaningful change, and that creativity will be a key differentiator in creating and delivering them. The Board of Next Fifteen believes that this creates a viable alternative for customers not well served by the big four consulting and marketing services groups.

A combination bringing together highly complementary strengths and strategies

Expected to be an earnings accretive transaction creating a business of significant global scale

Bringing together two highly talented organisations led by experienced senior management teams

Significant benefits for clients across the Enlarged Group

Financing

The cash consideration payable under the Acquisition is approximately £50.2 million on a fully diluted basis. Next Fifteen has entered into an amendment and restatement agreement, amending and restating an existing facility agreement with its current banks, HSBC and Bank of Ireland on 20 May 2022 ( the existing facility agreement as amended and restated being the “Restated Facilities Agreement”). The total amount available under the Restated Facilities Agreement is £150 million, an increase of £70 million. As at 31 January 2022, Next Fifteen had net cash of £35.7 million and as at 31 December 2021, M&C Saatchi had net cash of £34.4 million.

Smith Square Partners, financial adviser to Next Fifteen, is satisfied that sufficient resources are available to Next Fifteen to enable it to satisfy, in full, the cash consideration payable to M&C Saatchi Shareholders under the terms of the Acquisition.

Current trading

Next Fifteen

Next Fifteen released its final results for the year ended 31 January 2022 on 5 April 2022, which included the following information in relation to its current trading and outlook:

Overall, revenue growth has continued to be strong, helped by the strength of the US dollar. For the three-month period to 30 April 2022, the Next Fifteen Group's total revenues increased by approximately 68 per cent. compared with the same period last year, to £130 million, with organic revenue growth of approximately 37 per cent. Adjusted profit before tax for the same three-month period to 30 April 2022 is also ahead of management expectations.

Performance has been strong across all four areas of the Next Fifteen Group, with each segment showing encouraging organic revenue growth of at least 15 per cent. in the three months to 30 April 2022. Next Fifteen's businesses in the US have been performing above expectations, the onboarding of Engine has been progressing well and the new Mach49 contract, announced on 23 February 2022, is off to an encouraging start.

M&C Saatchi

On 29 April 2022, M&C Saatchi announced its record results for the year ended 31 December 2021 (FY21). It also reported strong momentum into 2022 and forecast headline profit before tax expected to be in the region of £31.0 million and £41.0 million for the years ending 31 December 2022 and 2023 respectively. Further details are included in the paragraph entitled “Background to and reasons for the M&C Saatchi Independent Directors' recommendation” of this Announcement.

Unanimous recommendations and irrevocable undertakings

The M&C Saatchi Independent Directors, who have been so advised by Numis and Liberum as to the financial terms of the Acquisition, consider the terms of the Acquisition to be fair and reasonable. In providing their financial advice to the M&C Saatchi Independent Directors, Numis and Liberum have taken into account the commercial assessments of the M&C Saatchi Independent Directors. Liberum is providing independent financial advice to the M&C Saatchi Independent Directors for the purposes of Rule 3 of the Takeover Code.

Accordingly, the M&C Saatchi Independent Directors intend unanimously to recommend that M&C Saatchi Shareholders vote in favour of the Scheme at the M&C Saatchi Court Meeting and the resolutions relating to the Acquisition at the M&C Saatchi General Meeting (or in the event that the Acquisition is implemented by way of an Offer, to accept or procure acceptance of such Offer) as the M&C Saatchi Independent Directors who hold M&C Saatchi Shares have irrevocably undertaken to do or procure in respect of their own beneficial holdings of 752,627 M&C Saatchi Shares in aggregate and representing approximately 0.6 per cent. of M&C Saatchi's issued share capital on the Last Practicable Date. Further details of these irrevocable undertakings are set out in Appendix 3 to this Announcement. Next Fifteen intends to engage with M&C Saatchi Shareholders in the coming days to seek their support for the Acquisition.

Next Fifteen will be required to seek the approval of Next Fifteen Shareholders at the Next Fifteen General Meeting to issue the New Next Fifteen Shares. As such, the Acquisition will be conditional on the approval of Next Fifteen Shareholders of the issuance of the New Next Fifteen Shares at the Next Fifteen General Meeting. The Next Fifteen Directors consider the Acquisition to be in the best interests of Next Fifteen and the Next Fifteen Shareholders as a whole and intend unanimously to recommend that Next Fifteen Shareholders vote in favour of the resolution(s) to be proposed at the Next Fifteen General Meeting, as those of them who hold Next Fifteen Shares have irrevocably undertaken to do, or procure, in respect of their own beneficial holdings of 5,471,416 Next Fifteen Shares representing, in aggregate, approximately 5.6 per cent. of Next Fifteen's ordinary share capital in issue on the Last Practicable Date.

Transaction structure and timetable

It is intended that the Acquisition will be implemented by way of a court sanctioned scheme of arrangement between M&C Saatchi and the M&C Saatchi Shareholders under Part 26 of the Companies Act 2006, further details of which are contained in the full text of this Announcement and which will be set out in the Scheme Document. However, Next Fifteen reserves the right, with the consent of the Panel and in accordance with the terms of the Cooperation Agreement, to implement the Acquisition by way of a takeover offer (as defined in Part 28 of the Companies Act 2006).

The Acquisition will be subject to the Conditions and certain further terms set out in Appendix 1 to this Announcement and to the full terms and conditions which will be set out in the Scheme Document, including the approval of the Scheme by the Scheme Shareholders, the sanction of the Scheme by the Court and the approval of Next Fifteen Shareholders. The Conditions include those relating to UK CMA merger control approval, and regulatory approvals under the UK NSIA, the US CFIUS regime and the Australian foreign investment regulatory framework as further described in Part A of Appendix 1 to this Announcement.

The Scheme Document will include full details of the Scheme, together with notices of the M&C Saatchi Court Meeting and the M&C Saatchi General Meeting and the expected timetable, and will specify the action to be taken by Scheme Shareholders. It is expected that the Scheme Document will be despatched to M&C Saatchi Shareholders in June 2022 and, in any event, within 28 days of this Announcement unless otherwise agreed by the Panel.

The Scheme is expected to become effective in the second half of 2022, subject to the satisfaction or waiver of the Conditions and certain further terms set out in Appendix 1 to this Announcement.