MDC Partners and the marketing consultancy Stagwell Group, both headed by Mark Penn, have agreed on a merger, according to the two companies.
The Stagwell Group initially proposed the merger in June. By Monday, MDC Partners' board of directors had approved the merger, but it has yet to be approved.
The Stagwell Group was founded by Penn in 2015 and invested $ 100 million in MDC Partners last year. Penn has since been Chairman and CEO of MDC Partners and Managing Partner of the Stagwell Group.
MDC Partners owns agencies like 72andSunny, Anomaly, CPB, Colle McVoy, and Doner. The agencies of the Stagwell Group include Code and Theory and the creative consultancy Wolfgang. Together, the combined company will have 8,600 employees in 23 countries. According to the Stagwell Group, the two had net sales of more than $ 2 billion last year.
In a statement announcing the merger, the companies said they will manage $ 4.4 billion in media spending once they are combined. In addition, the new offering could generate organic growth of more than 5% annually.
"This is a new day for MDC and Stagwell," Penn said in a statement. “MDC is celebrated for bringing award-winning creative firepower to the world's leading and most ambitious companies. Stagwell was built at its core with in-depth and sophisticated technology. The combined company will not be weighed down by existing structures or assets and will have the integrated, modern offerings marketers deserve and the resources to invest meaningfully in our global capabilities, talents and the future of our customers. "
In October, MDC Partners saw sales declined 16.4% in the third quarter. The company said the losses were largely due to Covid-19 and its impact on customer spending.
MDC Partners was founded in 1980 by Miles Nadal as Multi Discipline Communications and went public in 1987. Crispin Porter + Bogusky (now CPB) was added in 2001, Anomaly in 2010 and 72andSunny in 2011.
In 2015, founder Nadal abruptly left the holding company after the Securities and Exchange Commission investigated MDC's CEO's expenses.
Penn was named CEO and Chairman in March 2019. This equates to a change in leadership in line with the Stagwell Group's investment, which was slightly less than 30% of the shares in MDC.