MDC Partners Special Committee Responds To Indaba Capital Management, L.P.

NEW YORK, May 26, 2021 /PRNewswire/ -- The Special Committee of Independent Directors of MDC Partners Inc. (NASDAQ: MDCA) ("MDC Partners" or the "Company") responded today to press reports indicating that Indaba Capital Management, L.P. ("Indaba") will vote against the proposed business combination (the "Combination") involving MDC Partners and Stagwell Media ("Stagwell") with the following statement:

"The MDC Special Committee, MDC executives and Stagwell executives have met with Indaba on multiple occasions over the past several months to highlight the many strategic benefits of the Combination and the exceptional opportunity for value creation the Combination provides to MDC shareholders.  We are disappointed that Indaba has chosen to take its private concerns public and believe its analysis and other suggestions are inaccurate and irresponsible.

"The Special Committee is gratified that most MDC investors appear to recognize the value that can be created through the Combination. Prior to the announcement of Stagwell's interest in combining with MDC on June 26, 2020, MDC stock closed at $1.15 per share. MDC's stock closed at $4.69 per share, as of May 26, 2021, at or near its highest point at any time during 2019 and 2020. In addition, the volume of shares traded has also increased substantially. We have no doubt that a significant portion of this appreciation in value and trading is due to enthusiasm for the Combination, and the view of most shareholders that the Combination will create growth and cash flow that will generate value for MDC shareholders going forward.

"The Special Committee agrees. We worked tirelessly on behalf of MDC shareholders, sought the advice of financial advisors, and negotiated over a long period of time to ensure MDC shareholders received fair value for their shares in MDC. We firmly believe that MDC shareholders should, and largely do, welcome and support the Combination, which offers MDC the chance to partner with leading digital and technology-focused marketing businesses to create profitable growth opportunities and a better company.

"In the view of the Special Committee, Stagwell is at the forefront of technology, digital marketing and strategic communications trends and has generated consistently high margins and double-digit revenue and EBITDA growth since its founding. MDC has been in the midst of a transformation, but has not yet returned to organic growth and remains constrained by the high leverage on its balance sheet as well as a portfolio of agencies that are heavily weighted to creative and traditional advertising.

"The fact is this deal makes compelling strategic and financial sense and that is well-recognized in the market.  This conclusion is validated by the fact that, since June 2020 when Stagwell approached MDC Partners with a public overture to combine the two companies, there has been an opportunity for other buyers to emerge, and no other party has come forward with any other proposal.  

"It is unfortunate that, after several conversations with both representatives of the Special Committee and MDC management, Indaba claims it does not recognize the strategic merits of this transaction or the value creation it has already provided to MDC shareholders. Indaba's resistance to a transaction that has been embraced by the market and created a significant uplift in MDC's share price puts the Combination at risk, which is regrettable for all MDC shareholders. We encourage other MDC shareholders to read carefully our full proxy statement, to vote in favor of the Combination and to protect the gains in the stock price that have already resulted from the announcement of this attractive transaction."

About MDC Partners Inc.

MDC Partners is one of the most influential marketing and communications networks in the world. As "The Place Where Great Talent Lives," MDC Partners is celebrated for its innovative advertising, public relations, branding, digital, social and event marketing agency partners, which are responsible for some of the most memorable and effective campaigns for the world's most respected brands. By leveraging technology, data analytics, insights and strategic consulting solutions, MDC Partners drives creative excellence, business growth and measurable return on marketing investment for over 1,700 clients worldwide. For more information about MDC Partners and its partner firms, visit our website at mdc-partners.com, sign up for investor-related updates and alerts, and follow us on LinkedIn. 

Cautionary Statement Regarding Forward-Looking Statements

This communication may contain certain forward-looking statements (collectively, "forward-looking statements") within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended and Section 21E of the U.S. Exchange Act and the United States Private Securities Litigation Reform Act of 1995, as amended, and "forward-looking information" under applicable Canadian securities laws. Statements in this document that are not historical facts, including statements about MDC's or Stagwell's beliefs and expectations and recent business and economic trends, constitute forward-looking statements. Words such as "estimate," "project," "target," "predict," "believe," "expect," "anticipate," "potential," "create," "intend," "could," "should," "would," "may," "foresee," "plan," "will," "guidance," "look," "outlook," "future," "assume," "forecast," "focus," "continue," or the negative of such terms or other variations thereof and terms of similar substance used in connection with any discussion of current plans, estimates and projections are subject to change based on a number of factors, including those outlined in this section. Such forward-looking statements may include, but are not limited to, statements related to: future financial performance and the future prospects of the respective businesses and operations of MDC, Stagwell and the combined company; information concerning the Proposed Transaction; the anticipated benefits of the Proposed Transaction; the likelihood of the Proposed Transaction being completed; the anticipated outcome of the Proposed Transaction; the tax impact of the Proposed Transaction on MDC and shareholders of MDC; the timing of the shareholder meeting to approve the Proposed Transaction (the "Special Meeting"); the shareholder approvals required for the Proposed Transaction; regulatory and stock exchange approval of the Proposed Transaction; and the timing of the implementation of the Proposed Transaction. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement, including the risks identified in our filings with the SEC.

These forward-looking statements are subject to various risks and uncertainties, many of which are outside MDC's control. Important factors that could cause actual results and expectations to differ materially from those indicated by such forward-looking statements include, without limitation, the risks and uncertainties set forth under the section entitled "Risk Factors" in the registration statement on Form S-4 filed on February 8, 2021, and as amended on March 29, 2021, April 21, 2021 and April 30, 2021 (the "Form S-4"), under the section entitled "Risk Factors" in the proxy statement/prospectus on Form 424B3 filed on May 10, 2021 (together with the Form S-4, the "Proxy Statement/Prospectus") and under the caption "Risk Factors" in MDC's Annual Report on Form 10-K for the year-ended December 31, 2020 under Item 1A. These and other risk factors include, but are not limited to, the following:

• an inability to realize expected benefits of the Proposed Transaction or the occurrence of difficulties in connection with the Proposed Transaction;
• adverse tax consequences in connection with the Proposed Transaction for MDC, its operations and its shareholders, that may differ from the expectations of MDC or Stagwell, including that future changes in tax law, potential increases to corporate tax rates in the United States and disagreements with the tax authorities on MDC's determination of value and computations of its tax attributes may result in increased tax costs;
• the occurrence of material Canadian federal income tax (including material "emigration tax") as a result of the Proposed Transaction;
• the impact of uncertainty associated with the Proposed Transaction on MDC's and Stagwell's respective businesses;
• direct or indirect costs associated with the Proposed Transaction, which could be greater than expected;
• the risk that a condition to completion of the Proposed Transaction may not be satisfied and the Proposed Transaction may not be completed; and
• the risk of parties challenging the Proposed Transaction or the impact of the Proposed Transaction on MDC's debt arrangements.

You can obtain copies of MDC's filings under its profile on SEDAR at www.sedar.com, its profile on the SEC's website at www.sec.gov or its website at www.mdc-partners.com.  MDC does not undertake any obligation to update any forward-looking statements as a result of new information, future developments or otherwise, except as expressly required by law. All forward-looking statements in this communication are qualified in their entirety by this cautionary statement.

Additional Information and Where to Find It
In connection with the Proposed Transaction, MDC and New MDC filed with the SEC the Proxy Statement/Prospectus.  This communication is not a substitute for the Proxy Statement/Prospectus or any other document MDC may file with the SEC in connection with the Proposed Transaction. Once effective, MDC will mail the Proxy Statement/Prospectus to its shareholders in connection with the votes to approve certain matters in connection with the Proposed Transaction.

INVESTORS AND SECURITYHOLDERS OF MDC ARE URGED TO READ CAREFULLY THE PROXY STATEMENT/PROSPECTUS REGARDING THE PROPOSED TRANSACTION IN ITS/THEIR ENTIRETY (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) OR ANY DOCUMENTS WHICH ARE INCORPORATED BY REFERENCE IN THE PROXY STATEMENT/PROSPECTUS, BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. You may obtain, free of charge, copies of the Proxy Statement/Prospectus and other relevant documents filed by MDC or New MDC with the SEC, at the SEC's website at www.sec.gov. In addition, investors and securityholders are able to obtain free copies of the Proxy Statement/Prospectus and other relevant documents filed by MDC or New MDC with the SEC and from MDC's website at http://www.mdc-partners.com.

The URLs in this announcement are intended to be inactive textual references only. They are not intended to be active hyperlinks to websites. The information on such websites, even if it might be accessible through a hyperlink resulting from the URLs or referenced herein, is not and shall not be deemed to be incorporated into this announcement. No assurance or representation is given as to the suitability or reliability for any purpose whatsoever of any information on such websites.

No Offer or Solicitation
This communication does not constitute an offer to buy or exchange, or the solicitation of an offer to sell or exchange, any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, sale or exchange would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. This communication is not a substitute for any prospectus, proxy statement or any other document that MDC or New MDC may file with the SEC in connection with the Proposed Transaction. No money, securities or other consideration is being solicited, and, if sent in response to the information contained herein, will not be accepted.

No offering of securities shall be made except by means of a prospectus meeting the requirements of the U.S. Securities Act of 1933, as amended. The Proposed Transaction and distribution of this document may be restricted by law in certain jurisdictions and persons into whose possession any document or other information referred to herein should inform themselves about and observe any such restrictions.  Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. No offering of securities will be made directly or indirectly, in or into any jurisdiction where to do so would be inconsistent with the laws of such jurisdiction.

Participants in the Solicitation
MDC, New MDC and their respective directors and executive officers and other members of management and employees, may be deemed to be participants in the solicitation of proxies from MDC's shareholders with respect to the approvals required to complete the Proposed Transaction. More detailed information regarding the identity of these potential participants, and any direct or indirect interests they may have in the Proposed Transaction, by security holdings or otherwise, is set forth in the Proxy Statement/Prospectus filed with the SEC. Information regarding MDC's directors and executive officers is set forth in the definitive proxy statement on Schedule 14A filed by MDC with the SEC on May 10, 2021 and in the Annual Report on Form 10-K filed by MDC with the SEC on March 16, 2021, as amended on April 27, 2021.  Additional information regarding the interests of participants in the solicitation of proxies in respect of the Special Meeting is included in the Proxy Statement/Prospectus filed with the SEC.  These documents are available to the shareholders of MDC free of charge from the SEC's website at www.sec.gov and from MDC's website at www.mdc-partners.com.

You must not construe the contents of this document as legal, tax, regulatory, financial, accounting or other advice, and you are urged to consult with your own advisors with respect to legal, tax, regulatory, financial, accounting and other consequences of the Proposed Transaction, the suitability of the Proposed Transaction for you and other relevant matters concerning the Proposed Transaction.

SOURCE MDC Partners Inc.

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