A sharp fall in the Next Fifteen Communications (LON:NFC) share price over the past month has led to the M&C Saatchi (LON: SAA) board withdrawing its recommendation of the bid by the marketing services company.
Next Fifteen is offering 0.1637 of one of its shares and 40p in cash for each Saatchi share. At a Next Fifteen share price of 1266p, the bid was valued at 247.2p a share.
Since then, the Next Fifteen share price has dropped to 892p and that values the bid at 186p a share.
The board is also still rejecting the rival bid by AdvancedAdvT (LON: ADVT), who along with its boss Vin Murria owns 22.3%. It is offering 2.53 of its shares for each M&C Saatchi share or 2.043 of its shares plus 40p for each share.
At 78p, this values the alternative bids by AdvancedAdvT at 197p a share and 199p a share respectively. If NAV of 96.4p a share is used, then the values are 243.9p a share and 236.9p a share.
AdvancedAdvT says that it will not increase its bid. Vin Murria will seek to be reappointed to the M&C Saatchi board if neither bid is successful.
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Next Fifteen says that it is disappointed that the recommendation has been withdrawn but it points out that the M&C Saatchi management still believes that the combination of the businesses makes strategic commercial sense.
Even though, the share price has fallen, M&C Saatchi shareholders would still own the same percentage of he enlarged group.
Next Fifteen has called a general meeting so that it can gain shareholder approval for the issue of shares required for the bid. This is held on 19 August, which is the same day as the M&C Saatchi meeting to vote on the takeover offer.
The acceptance date for the AdvancedAdvT bid is 13 August.
As 75% of the share capital is required for the bid it will be difficult for Next Fifteen to achieve that target. That means that M&C Saatchi is likely to remain independent unless another bid comes along.