MDC Partners and Stagwell Group have reached an agreement to combine into a top 10 global marketing services company after MDC’s board approved the transaction, the two networks said on Monday.
Mark Penn, chairman and CEO of MDC and managing partner of Stagwell, would serve as chairman and CEO of the combined company, with a management team consisting of executives from the two networks.
Stagwell and its affiliates are expected to hold 79% of the combined company’s common equity when the transaction closes, the two networks said in a statement.
The combined holding company, which will have 8,600 employees in 23 countries, is planning to invest in expanded services globally and digital marketing products. The network is targeting 5%-plus annual organic growth, driven by a 10% to 15% increase in digital marketing growth and complementary capabilities, as well as more than 9% total annual revenue growth, with a goal of more than $3 billion in revenue in 2025, including acquisitions, organic growth and new products, the companies said in a statement. Its media and data operation is expected to manage $4.4 billion in media spend.
Organic growth indicates change in revenue without taking into account the impact of acquisitions or disposals.
Penn became MDC's CEO in 2019 after Stagwell, where he is managing partner, invested $100 million in the company.
Stagwell’s agencies include Code and Theory, ForwardPMX, Grason, Harris Insights & Analytics, HarrisX, Ink, Locaria, MMI Agency, Multiview, National Research Group, Observatory, Reputation Defender, Scout, SKDKnickerbocker, Stagwell Tech, Targeted Victory and Wye Communications. Penn founded Stagwell Group in 2015 with initial investment capital of $250 million.
Last December, MDC Partners formed an agency network bringing together U.S. creative shop Doner with six complementary specialist firms in North America, including PR firms KWT Global and HL Group, which merged on June 1. MDC’s other agencies include Anomaly 72andsunny and Crispin Porter + Bogusky.
MDC posted a 16.4% drop in Q3 organic revenue to $283.4 million, primarily due to a reduction in spending by clients in connection to COVID-19.
This article originally appeared on PRWeek.