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Benefits of Business Combination


The MDC Special Committee has unanimously determined that the business combination of MDC Partners and Stagwell is in the best interests of MDC and MDC Canada shareholders.

The Combined Company will be poised to deliver meaningful shareholder value creation, accelerated growth and enhanced services to clients. In contrast to MDC Canada continuing as a standalone company, the Combined Company will be well-positioned to become a leading marketing services company, with enhanced global scale and broadened capabilities:

Enhanced Shareholder Value

The Combined Company will accelerate growth and enhance shareholder value. The Combined Company will offer a comprehensive suite of complementary marketing and communications services to clients, significantly expanding in the areas of high-growth digital services and expertise as well as substantial new capabilities across several disciplines and geographies, as compared to MDC as a standalone entity.

Estimated Cost Synergies

Due to certain synergies described in the accompanying proxy statement/prospectus under “The Proposed Transactions — Estimated Cost Synergies,” the Combined Company is expected to achieve certain cost synergies and incur run-rate savings of approximately $30 million over time, with approximately 90% of such savings expected to be realized within twenty-four months following the consummation of the Proposed Transactions.

Lower Pro Forma Leverage

The Combined Company will also have an improved credit profile, decreasing its consolidated net leverage ratio from 4.4X to 3.5X, after giving full effect to the expected run-rate operational synergies.

Enhanced Scale

The Combined Company will be a top ten global integrated marketing services company. The Combined Company will have an expanded global scale, operating in 23 countries, and expanded media and data operations, managing
$4.4 billion in media spend.

Enhanced Growth Opportunities

The Combined Company will have a target of 5%+ annual organic growth, driven by 10-15% digital marketing growth and complementary capabilities, and a target of 9%+ total annual revenue growth including new products and acquisitions. The Combined Company will more than triple its concentration of high-growth digital offerings, with 32% of its business anticipated to be in the digital services sector. It is anticipated that the Combined Company will generate over $200 million of pro forma cash in 2021. The Combined Company will target growth to $3 billion+ in revenue in 2025, including acquisitions, organic growth and new products. In addition, the Combined Company will seek to develop new revenue streams by expanding its combined digital and technology products portfolios.

Three Continuing Independent Directors

Three individuals who currently serve as independent directors of MDC (the “Continuing Independent Directors”) will serve as directors on the board of directors of the Combined Company (the “Combined Company Board”) and the Combined Company has agreed to cause such directors to be nominated at the Combined Company’s next two annual meetings following completion of the Proposed Transactions. Mr. Penn will continue as a director and Stagwell has the right, pursuant to the Transaction Agreement, to nominate four directors (and Stagwell has informed MDC that it expects to nominate at least two independent directors) and an affiliate of Goldman Sachs & Co. LLC will have the right to nominate one director to serve on the Combined Company Board.

Continuing Independent Directors Will Comprise Audit Committee

The Combined Company’s audit committee will be comprised exclusively of the Continuing Independent Directors.

Questions about voting or need assistance? Contact Kingsdale Advisors:
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