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FAQs

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MDC Partners and The Stagwell Group to Combine, Forming New Transformative Global Marketing Network

What will MDC Canada Shareholders own following the Proposed Transactions?

If you are a current, non-dissenting holder of MDC Canada Common Shares or MDC Canada Preferred Shares, in connection with the Proposed Transactions you will receive:

  • for each MDC Canada Class A Common Share, one Combined Company Class A Common
  • Share,
  • for each MDC Canada Class B Common Share, one Combined Company Class B Common
  • Share,
  • for each MDC Canada Series 4 Share, one Combined Company Series 4 Share, and
  • for each MDC Canada Series 6 Share, one Combined Company Series 6 Share.

As a result of differences between Delaware law and the CBCA, there will be differences between your rights as a stockholder of the Combined Company under Delaware law and your current rights as a shareholder of MDC Canada under the CBCA. In addition, there are differences between the organizational documents of MDC Canada and the Combined Company. These differences are discussed in detail under “Comparison of Stockholder Rights”. Also refer to “Description of MDC Delaware and the Combined Company Capital Stock” for a description of the Combined Company Shares. The Combined Company Certificate of Incorporation and Combined Company Bylaws, in the form substantially as they will be in effect upon completion of the Proposed Transactions, are attached as Annexes A and B, respectively, of this Proxy Statement/Prospectus.

The MDC Delaware Class A Common Shares will be listed on NASDAQ from and after the MDC Merger.

On a pro forma basis (and (i) without giving effect to the conversion of any Combined Company Preferred Shares and (ii) including unvested restricted stock and restricted stock units of MDC), following the completion of the Proposed Transactions, it is anticipated that the existing holders of MDC Canada Class A Common Shares (including Stagwell) and MDC Canada Class B Common Shares will receive Combined Company Class A Common Shares and Combined Company Class B Common Shares equal to approximately 26% of the common equity of the Combined Company and Stagwell would be issued an amount of Combined Company Class C Common Shares equivalent to approximately 74% of the voting rights of the Combined Company and exchangeable, together with Stagwell OpCo Units, for Combined Company Class A Common Shares on a one-for-one basis at Stagwell’s election following a six-month holding period. However, the number of Stagwell OpCo Units, the number of Stagwell Class C Shares and the percentage of the Combined Company that Stagwell will hold following the consummation of the Proposed Transactions, will be reduced, and the percentage of the Combined Company that existing MDC Canada Shareholders will hold will be proportionally increased, if Stagwell is unable to effect the Stagwell Restructuring prior to the Closing.

As of the close of business on April 29, 2021, Stagwell held approximately 18.3% of the MDC Canada Class A Common Shares. Thus, in the aggregate (i.e., including the MDC Canada Class A Common Shares that Stagwell beneficially held as of April 29, 2021 as well as the Stagwell OpCo Units and Stagwell Class C Shares), following the completion of the Proposed Transactions, Stagwell will hold approximately 78.22% of the common equity of the Combined Company, and is anticipated that holders of MDC Canada Class A Common Shares and MDC Canada Class B Common Shares as of April 29, 2021, excluding Stagwell, will receive Combined Company Class A Common Shares and Class B Common Shares equal to approximately 21.78% of the common equity of the Combined Company.

What is the Combined Company?

The Combined Company was formed as a Delaware limited liability company and a wholly owned subsidiary of MDC in order to effect the Proposed Transactions. Following the Redomiciliation, New MDC will convert into a Delaware corporation, and following the MDC Merger will be the successor public company registrant to MDC Delaware. Following the Closing, the Combined Company will be the manager and own approximately 26% of the common units of OpCo, which in turn will own the operating subsidiaries of MDC and Stagwell. However, the number of Stagwell OpCo Units, the number of Stagwell Class C Shares and the percentage of the Combined Company that Stagwell will hold following the consummation of the Proposed Transactions will each be reduced, and the percentage of the Combined Company that existing MDC Canada Shareholders will hold will be proportionally increased, if Stagwell is unable to effect the Stagwell Restructuring prior to the Closing.

Why is MDC proposing to enter into the Proposed Transactions?

MDC Canada believes that the Proposed Transactions will provide a number of significant strategic benefits and opportunities that will be in the best interests of MDC and the MDC Canada Shareholders. To review the reasons for the Proposed Transactions in greater detail, see “The Proposed Transactions — MDC’s Reasons for the Proposed Transactions; Recommendation of the MDC Special Committee and the MDC Board” beginning on page 162.

Who will be the directors and executive officers of the Company following the Proposed Transactions?

Following the completion of the Proposed Transactions, the Combined Company Board of Directors (the “Combined Company Board”) will consist of nine members, including Mr. Mark Penn. Three individuals currently serving as independent directors of MDC will serve as directors on 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 as well as the Combined Company’s Chief Executive Officer. Stagwell will be entitled to designate four directors and has informed MDC that it expects to nominate at least two independent directors. An affiliate of Goldman Sachs will be entitled to designate one director to serve on the Combined Company Board. The directors and officers of the Combined Company will be identified prior to the Closing. See “Governance and Management of the Combined Company Following the Proposed Transactions – Structure of the Board of Directors”.

What were the MDC Special Committee’s reasons for recommending that the MDC Board approve the Transaction Agreement and the Proposed Transactions?

In evaluating the Proposed Transactions, the Transaction Agreement and the Ancillary Agreements, and in reaching its determinations and making its recommendations, the MDC Special Committee consulted with the Disinterested Senior Executives and its legal and financial advisors, and gave careful consideration to the current and expected future financial position of MDC and all terms of the Transaction Agreement and the Ancillary Agreements.

The MDC Special Committee considered a number of factors including, among others, the following:

  • Moelis Opinion. The MDC Special Committee retained Moelis as its financial advisor in respect of, among other things, the Proposed Transactions, including with respect to the negotiation of a potential transaction with Stagwell. Moelis delivered an oral opinion (which was subsequently confirmed in writing) to the MDC Special Committee that, as of December 21, 2020, and based upon and subject to the assumptions made, procedures followed, matters considered and other limitations set forth in the Moelis Opinion, the Post-Transaction Ownership Percentage of the Combined Company to be held by the holders of MDC Canada Common Shares upon completion of the Proposed Transactions was fair, from a financial point of view, to the holders of MDC Canada Common Shares (other than the Interested Shareholders).
  • Canaccord Genuity Opinion and Formal Valuation. The MDC Special Committee received an independent formal valuation required to be obtained in connection with the Proposed Transactions pursuant to MI 61-101, along with a fairness opinion that, as of December 21, 2020 and based upon and subject to the qualifications, limitations and assumptions set forth therein and such other matters as Canaccord Genuity considered relevant, (i) the consideration to be paid by MDC for the Stagwell Subject Entities pursuant to the Transaction Agreement was fair, from a financial point of view, to the holders of MDC Canada Class A Common Shares (other than Mark Penn, Stagwell, Goldman Sachs and their affiliates), with such opinion assuming, among other items, the conversion of the MDC Canada Class B Common Shares into MDC Canada Class A Common Shares; (ii) the fair market value of the MDC Canada Class A Common Shares (assuming the conversion of the MDC Canada Class B Common Shares into MDC Canada Class A Common Shares) ranged from $4.70 to $7.40 per MDC Canada Class A Common Share; and (iii) the fair market value of the Stagwell Subject Entities ranged from $1.2 billion to $1.5 billion.
  • Transaction Agreement. The MDC Special Committee reviewed and negotiated the proposed Transaction Agreement and Ancillary Agreements and considered the independent legal advice of DLA Piper and such other matters as the MDC Special Committee deemed necessary or advisable in order to provide a recommendation to the MDC Board in respect of the Transaction Agreement and the Proposed Transactions.
  • Prior MDC Strategic Review and Public Nature of the Stagwell Proposal. The MDC Special Committee considered the fact that prior to receipt of the Stagwell Proposal, the Company had recently conducted a robust and comprehensive strategic review process that took place over approximately seven months and involved outreach by the Company’s financial advisors at the time to not less than 34 third parties, which process resulted in no final or binding offers for an acquisition of, or investment in, the Company from any party other than Stagwell. Relatedly, the MDC Special Committee also considered the fact that following Stagwell’s public announcement of its proposal on June 26, 2020, putting other potential third-party bidders on notice of a possible transaction, no third-party had come forward during the approximately six-month period after publication of the Stagwell Proposal and prior to entry into the Transaction Agreement on December 21, 2020 to make a competing offer, and that as a result, it was unlikely that a competing proposal was likely to be made on terms as attractive as those negotiated with Stagwell.
  • Previous Stagwell Strategic Review and Stagwell’s Communicated Position to Not Support Alternative Transaction. In connection with Stagwell’s exploration of strategic alternatives in 2019 (the “Stagwell 2019 Sale Process”), only one participant had expressed an interest in a transaction involving MDC and the 2019 Special Committee determined not to proceed to negotiations with such participant. The lack of interested bidders in these prior exchanges led the MDC Special Committee to conclude that it was unlikely that a competing proposal was likely to be made on terms as attractive as those negotiated with Stagwell. The MDC Special Committee also noted Stagwell’s statement in the Stagwell Proposal that Stagwell, in its capacity as an existing holder of MDC Canada Shares, was not prepared to support, consent to or vote in favor of an alternative transaction by the Company, including an alternative business combination or sale transaction.

For further discussion of the Moelis Opinion and the Canaccord Genuity Opinion and Formal Valuation, see “The Proposed Transactions — Opinion of Moelis” and “The Proposed Transactions — Canaccord Genuity Opinion and Formal Valuation,” respectively.

In addition to the deliberations and review noted above, the MDC Special Committee discussed certain matters with the Disinterested Senior Executives and other members of the MDC Board, as well as its financial and legal advisors, and considered a number of factors (not in any relative order of importance) that supported the MDC Special Committee’s determination and recommendation in favor of the Proposed Transactions, including:

  • Shareholder Approval and Protection of Minority Interest: The Proposed Transactions are conditioned on receipt of the Required Shareholder Approvals. The Required Shareholder Approvals are protective of the rights of the MDC Canada Shareholders. The Redomiciliation Proposal and Business Combination Proposal require the affirmative vote of (i) at least two-thirds of the votes cast on such proposals, virtually or by proxy by the MDC Canada Shareholders, voting together as a single class, and (ii) at least a majority of the votes cast on such proposals, virtually or by proxy by the MDC Canada Shareholders, excluding the votes attached to MDC Canada Shares held by persons described in items (a) through (d) of Section 8.1(2) of MI 61-101, with holders of MDC Canada Shares voting together as a single class.
  • Corporate Governance Protections. The Transaction Agreement contains various corporate governance provisions that provided protections for the MDC Canada Shareholders, including:
  • The Continuing Independent Directors will serve as directors on 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.
  • The Combined Company’s audit committee will be comprised exclusively of the Continuing Independent Directors.
  • During the Restricted Period, the Transaction Agreement generally will prohibit the Combined Company from entering into (i) certain related party transactions without the approval of a majority of the independent directors serving on the Combined Company Board and (ii) any proposed business combinations involving Stagwell or its affiliates without (A) the approval of Combined Company Shareholders representing a “majority of the minority” of the voting power of the Combined Company and (B) the creation of a special committee of independent directors with authority similar to that of the MDC Special Committee.
  • Alternative Proposal. The Transaction Agreement does not prevent a third party from making an unsolicited Alternative Proposal, and subject to compliance with the terms of the Transaction Agreement, at any time prior to receipt of the Required Shareholder Approvals, each of the MDC Special Committee and the MDC Board is not precluded from considering and responding to an unsolicited Alternative Proposal that the MDC Special Committee or the MDC Board, as applicable, determines in its good faith judgment, after consultation with its financial advisor and outside legal counsel, is or is reasonably likely to lead to a Superior Proposal, as further described under “The Transaction Agreement.”
  • Goldman Letter Agreement. On December 21, 2020, MDC and BSPI entered into an initial letter agreement (the “Initial Goldman Letter Agreement”), pursuant to which, among other things, BSPI consented to the Proposed Transactions and agreed to vote its MDC Canada Series 4 Shares in favor of the Transaction Proposals, subject to entry with MDC into a definitive agreement. On April 21, 2021, MDC and BSPI entered into a second letter agreement (the “Second Goldman Letter Agreement”) setting forth the definitive agreement contemplated by the Initial Goldman Letter Agreement. Please see the section entitled “Voting Agreements — Goldman Letter Agreement” for more information with respect to the Second Goldman Letter Agreement, and the Second Goldman Letter Agreement is attached hereto as Annex E.
  • Consent by Holders of Senior Notes: On December 21, 2020, MDC entered into separate consent and support agreements with holders of more than 50% of the aggregate principal amount of the Senior Notes.
  • Limited conditions and requirements for completion of the Proposed Transactions. The obligation of Stagwell to complete the Proposed Transactions is subject to a limited number of conditions, which the MDC Special Committee believes are reasonable under the circumstances.
  • Dissent Rights. Registered MDC Canada Shareholders who do not vote in favor of the Redomiciliation Proposal will have the right to exercise Dissent Rights and be paid fair value by MDC for all, but not less than all, of the MDC Canada Shares beneficially owned by each such registered MDC Canada Shareholder pursuant to the proper exercise of Dissent Rights in accordance with the CBCA. See “Dissenters’ and Appraisal Rights — Dissenters’ Rights.”
  • Appraisal Rights. Appraisal rights will be available to holders of MDC Canada Class B Common Shares and MDC Canada Preferred Shares in connection with the MDC Merger only under the circumstances set forth in Section 262 of the DGCL and subject to their compliance with the requirements of Section 262. See “Dissenters’ and Appraisal Rights — Appraisal Rights.”
  • Additional Factors: The MDC Special Committee also considered the following additional factors (i) the Stagwell 2019 Sale Process and the MDC Board and MDC Special Committee’s broader consideration of strategic alternatives in 2018 and 2019, (ii) the historical stock prices of MDC and the business outlook, (iii) the extensive due diligence review of the businesses of the Stagwell Subject Entities, (iv) the negotiated increase in the pro forma ownership of the pre-transaction MDC Canada Shareholders from the initial terms of the Stagwell Proposal, (v) the consideration adjustment mechanisms relating to the Stagwell Restructuring and (vi) the negotiation of a lock-up period on Stagwell’s ability to effect a Paired Interest Exchange.
Does the MDC Board recommend that I vote FOR the Transaction Proposals and the Compensation Proposal?

Yes. The MDC Board (other than Mark Penn (who abstained because he controls and has an ownership interest in Stagwell), Charlene Barshefsky (who abstained because she was initially nominated to the MDC Board by Stagwell) and Bradley Gross (who abstained because he is a Managing Director of Goldman Sachs) who abstained from voting on or participating in any deliberations with respect to the Proposed Transactions) unanimously, at its meeting on December 21, 2020, acting upon the unanimous recommendation of the MDC Special Committee, (i) determined that it is in the best interests of MDC and the MDC Canada Shareholders (other than Mark Penn, Stagwell, Goldman Sachs and their respective affiliates (other than MDC and its subsidiaries) (the “Interested Shareholders”)) to enter into the Transaction Agreement and consummate the Proposed Transactions, (ii) approved the execution, delivery and performance by MDC of the Transaction Agreement and the A&R OpCo Operating Agreement, the Registration Rights Agreement, the Tax Receivables Agreement, the Information Rights Letter Agreement, (the “Related Agreements”) the Initial Goldman Letter Agreement, and the Stagwell Letter Agreement (together with the Related Agreements, the “Ancillary Agreements”) and the consummation of the Proposed Transactions and (iii) resolved to recommend that the MDC Canada Shareholders vote for the Proposals.

Acting upon the unanimous recommendation of the MDC Special Committee, the MDC Board (other than Mark Penn, Charlene Barshefsky and Bradley Gross (collectively, the “Interested Directors”), who each abstained from voting on, or participating in any deliberations of the MDC Board with respect to the Proposed Transactions) recommends that the MDC Canada Shareholders vote their MDC Canada Shares:

  • FOR the Redomiciliation Proposal;
  • FOR the Business Combination Proposal;
  • FOR the MDC Delaware Proxy Proposal;
  • FOR the Series 6 Supervoting Proposal;
  • FOR the Stagwell Issuance Proposal; and

Additionally, the MDC Board (with the Interested Directors abstaining) recommends the MDC Canada Shareholders vote their MDC Canada Shares:

  • FOR the Compensation Proposal.

For more questions and answers on the Proposed Transactions and the Meeting, click here.

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