Mark Penn’s deal to merge ad holding company MDC into his tech-based Stagwell Group has finally gone through after Stagwell sweetened its offer following objections by some shareholders.
MDC has resolutely failed to make money despite owning some strong agency brands including Anomaly and 72andSunny but Penn os promising an S4 Capital-like future with organic revenue growth of a chunky $3bn over an unspecified period of time. Stagwell agencies include Code and Theory.
Penn (above) told Digiday: “We expect our growth to be principally organic because 40 percent of our services will be high-growth digital. That supplants the old model, of 90 percent traditional advertising at MDC. By fundamentally changing the mix, we’re going to change the growth pattern and go after much stronger organic growth and reach up for bigger client relationships.”
Penn is saying no mergers – yet – although it’s almost unheard of these days for such deal to leave all the brands in place. Mark Read at WPP has had some success (so far) merging his much bigger creative agencies. How will Penn’s Stagwell fare? With the ad business recovering strongly from the pandemic and companies all over the world falling over themselves in search of “digital transformation,” at least he seems to have his timing right.