MDC Partners (MDCA) and Stagwell Media LP Reach Agreement on Amended Transaction that Offers MDC Shareholders Greater Stake in Combined Business

New Proposal with Improved Financial Terms Provides Increased Value for MDC Shareholders, Further Enhanced Governance and Offers Best Chance to Create Global Modern Marketing Company with Near- and Long-Term Growth Prospects

Special Committee Recommends Shareholders Vote “FOR” the Amended Transaction

MDC Partners Inc. announced that the Special Committee of MDC’s Board of Directors, working with its independent legal and financial advisors, has completed its evaluation of the revised offer from Stagwell Media LP and reached an agreement on amended terms for the business combination of the Company and certain operating businesses of  Stagwell (the “Transaction”). The Amendment was unanimously recommended by the MDC Special Committee and unanimously approved by MDC’s Board of Directors (other than the interested directors). The Company expects to file a supplement to its proxy statement/prospectus as soon as practicable.

The Amendment, which took into account input and feedback from MDC shareholders and reflects extensive negotiations between the MDC Special Committee and Stagwell, provides for a decrease in the share consideration that Stagwell will receive in the Transaction to equity interests equivalent to 180 million common shares, a reduction of approximately 36 million common shares from the 216.25 million common shares agreed to in the transaction agreement entered into on December 21, 2020. Based on this change in share consideration, on a pro forma basis, the existing MDC common shareholders (including Stagwell) would own approximately 31% of the common equity of the combined company (the “Combined Company”) immediately following the closing of the Transaction.

MDC and Stagwell have also agreed to additional governance enhancements, including to provide that seven of the nine members of the Board of Directors of the Combined Company will be independent directors and two out of three of the members of the Nominating & Corporate Governance Committee will be continuing independent directors of the Company.  Stagwell has further agreed that it will relinquish its right to nominate a fourth director, and in lieu thereof, the ninth director of the Combined Company will be selected by mutual consent. In addition to these governance changes, each of Stagwell and Goldman Sachs have agreed to abate for one year following the closing of the Transaction any accretion on the Combined Company’s Series 6 preferred shares and Series 8 preferred shares, respectively.

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The MDC Special Committee worked closely with its legal and financial advisors over the past several weeks to negotiate the revised agreement, conduct additional due diligence (including a review of updated financial projections from both MDC and Stagwell), assess the relative value of each company in the transaction and consider the fairness of the revised offer.

After giving effect to the Amendment, the MDC Board of Directors, following the unanimous recommendation of the Special Committee, recommends that MDC shareholders vote “FOR” the Transaction for the following reasons:

• The combination with Stagwell affords MDC shareholders the best opportunity for value creation and growth through a meaningful ownership stake in a large company that is well positioned in the marketing and advertising communication sectors that are growing most quickly;
• The Combined Company will have lower leverage and more scale than MDC today, providing greater financial flexibility;
• The combination of MDC and Stagwell provides opportunities for cost savings and revenue synergies that will create additional value for MDC shareholders;
• With increased market capitalization, revenue and cash flow and participation in the growing sectors of the market, there is an improved chance for greater liquidity in the trading of the Combined Company’s stock and coverage from sell-side analysts, which may improve the valuation of the stock;
• The Special Committee received a fairness opinion from Moelis & Company LLC, financial advisor to the Special Committee in respect of the Transaction, providing that, as of the date thereof and based upon and subject to the assumptions, limitations and qualifications stated in such opinion, the percentage ownership of New MDC to be held by the holders of MDC Class A and Class B shares (together, the “MDC Common Shares”) upon completion of the Transaction is fair, from a financial point of view, to the holders of MDC Common Shares, other than Mark Penn, Stagwell, Goldman Sachs and their respective affiliates (other than MDC and its subsidiaries) (collectively, the “interested shareholders”);
• The governance protections provide meaningful protection of the interests of MDC shareholders going forward (including the ability for the minority shareholders to have meaningful influence over the composition of the entire Board of Directors of the Combined Company); and
• There is no better alternative available to MDC for creating value, gaining scale, reducing leverage, increasing trading liquidity, reducing costs and positioning the company in the growth sectors of the market.

Commenting on their support for the amended Transaction, the MDC Special Committee offered the following:

“We have negotiated the revised terms with Stagwell and believe that they deliver significant value for MDC shareholders and appropriately reflect Stagwell’s high-growth businesses and its financial performance and success, which has continued and gained momentum through a challenging year. Over the course of this process, we have spoken with many MDC shareholders and have advocated on their behalf to Stagwell to create even more value for them in this transaction. Our efforts have garnered additional financial and governance improvements from Stagwell that reward MDC shareholders for their contributions to the combined company and that protect their interests over time.

“Beyond that, we know that this combination makes strategic sense. Coming together with Stagwell puts MDC on the right path to growth with a stronger balance sheet, a better combination of digital capabilities and the right leadership for the future.

“We are fully convinced that the transaction we announced today is the single best path forward for MDC and its shareholders and will maximize value for MDC shareholders. To be clear, we do not believe there is a better or different transaction to be done with Stagwell, no other suitors have emerged and the standalone prospects of MDC are not nearly as attractive as the combination with Stagwell under the terms we announced this morning.

“Our Special Committee therefore fully endorses this transaction and strongly encourages MDC shareholders to embrace this chance to maximize value. The Board of Directors of MDC, following a unanimous recommendation of the members of the Special Committee,  recommends that the Company’s shareholders to vote ‘FOR’ this business combination.”

It is anticipated that the special meeting of shareholders of the Company to vote on the Transaction currently scheduled for July 19, 2021 will be commenced and adjourned with the new time and date for the Special Meeting of Shareholders to vote on the Transaction (the “Special Meeting”) expected to be Monday, July 26, 2021 at 11:00 AM ET, to be accessed virtually at https://web.lumiagm.com/401933402.  The Company will extend the scheduled proxy cut-off time for the Special Meeting and accept proxies and voting instructions, including electronic voting, until Thursday, July 22, 2021.

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