Mark Penn Comments On the Pending Stagwell and MDCA Combination

Stagwell Media LP ("Stagwell") today released comments by Mark Penn, the CEO and Chairman of MDC Partners Inc. (“MDC”) (NASDAQ: MDCA) and the Managing Partner of Stagwell, highlighting the merits of the pending MDC and Stagwell combination. The comments were posted to BusinessWire and on LinkedIn.

In his comments, Mr. Penn notes that, “The market has spoken: Stagwell and MDC Partners are better together” and that the “the combined entity has the prospect of strong growth and that growth can extend into the foreseeable future.”

The full text of his comments are as follows:

To Interested Parties:

The market has spoken: Stagwell and MDC Partners are better together.

A vote for this combination is a vote for a better future for MDC, for its thousands of employees and for stronger returns to its investors.

MDC Partners and Stagwell have both reported their results for 2020 and for the first quarter of 2021. No question that MDC is bouncing back from the lows of the pandemic and we have managed costs effectively even as the company lost 13% of its revenue last year. Stagwell made it through the pandemic with significantly higher revenue and adjusted EBITDA despite several divisions in the travel and entertainment area still suffering from the pandemic. The results enabled MDC to reaffirm its standalone guidance and to reaffirm guidance for 2021 assuming the combination with Stagwell occurs in the Second Quarter. The combined company would start off with over $2 billion in revenue and over $350 million in adjusted EBITDA, including synergies.

Stagwell brings some unique, high-value contributions to this partnership. First, its greater concentration of higher growth digital services means that after years of shrinkage of MDC, the combined entity has the prospect of strong growth and that growth can extend into the foreseeable future, fundamentally revaluing the company. Stagwell’s stronger balance sheet drops the leverage ratio to 3.2x, enabling the combined company to secure long-term financing at rates that are estimated to save $20 million per year. Other cost savings should be worth an additional $30 million to the combined company. A new digital products division based on Stagwell’s engineering team will generate valuable SaSS revenue. And Stagwell’s higher free cash flow generation combined with low deferred acquisition costs (just $15 million), will enable the combined company to invest in growth, and possibly to even return capital to shareholders.