The Stagwell Group, a private equity firm that manages investments in new media and digital marketing services, today announced its fund, Stagwell Media LP, has invested $100 million in MDC Partners, Inc through the purchase of $50 million in MDC Partners common shares and $50 million non-voting convertible preference shares.
In connection with the closing of the transaction, Stagwell Group Managing Partner Mark Penn will join MDC Partners as Chief Executive Officer and a member of its Board of Directors. Mark will remain Managing Partner of the Stagwell Group.
"We believe MDC Partners has some of the best brands in the creative and marketing worlds," said Stagwell's Chief Investment Officer Jason Reid. "Combined with the management of Mark Penn, this strategic investment positions the company to thrive in an environment of accelerating change that still demands top talent."
Since its founding in 2015, Stagwell Group has made over 20 investments in digital marketing services and raised over $500 million to support its investment strategy. Stagwell's portfolio of high growth companies include 2500 strategists across four categories: digital transformation and performance, public affairs and relations, research and insights and creative and storytelling.
The MDC Partners investment is consistent with Stagwell's strategy of investing in innovative digital marketing services companies.
Stagwell's existing portfolio includes performance marketing experts ForwardPMX, media innovator MMI Agency, healthcare and consumer experts SCOUT, research leader Harris Insights & Analytics, creative digital leader Code and Theory, strategic communications agency SKDKnickerbocker, telecommunications researchers HarrisX, entertainment research innovator National Research Group, public relations firm Finn Partners, communications agency Wye Communications, digital advocacy shop Targeted Victory, creative advertising consultancy Wolfgang, travel media leaders Ink, creative agency Observatory, online reputation management firm Reputation Defender and technology innovator Stagwell Technologies.
Management of the Stagwell Group remains unchanged.
Terms of the Investment
The Stagwell Group has purchased 14,285,714 Class A shares of the Company (the "Class A Shares") for $50 million, or $3.50 per share, which represents an 18% premium to the 30-day average closing price of $2.96 per share. In addition, the Stagwell Group has purchased $50 million of convertible preferred shares with a $5.00 conversion price (the "Preference Shares"). Following the transaction, the Stagwell Group owns approximately 19.5% of the outstanding common equity of the Company. Assuming the full conversion of the Preference Shares into the Company's Class A shares, the Stagwell Group will own approximately 29.2% of the outstanding equity of the Company. Assuming conversion of both the Stagwell Group Preference Shares and the currently outstanding Goldman Sachs preference shares which were issued in 2017, the Stagwell Group will own approximately 24.8% of the outstanding equity of the Company. The Preference Shares have a liquidation preference that accretes at a rate of 8.0% per annum, compounded quarterly until conversion on the five-year anniversary of the issuance date of the Preference Shares.
MDC Partners expects to use the net proceeds from the investment to pay down existing debt under the Company's credit facility and for general corporate purposes.
About The Stagwell Group
The Stagwell Group is a private equity firm that manages investments in new media and digital marketing services. Its portfolio includes almost 20 collaborative, digital-first agencies and over 2500 employees around the world. Led by a group of agency and industry professionals, Stagwell is a group of leading companies that were born and bred in a digital first era. The companies are not weighed down by legacy assets and are united in their desire to innovate, evolve, grow and deliver superior results for their clients. Stagwell's portfolio of high growth companies include experts in four categories: digital transformation and performance, public affairs and relations, research and insights and creative and storytelling. Online at www.stagwellgroup.com.
