MDC Partners, a media agency holding company, is expanding into a classic Wall Street business: proxy solicitation.
The company is expected to announce on Wednesday that it has acquired a majority interest in Kingsdale Shareholder Services, a proxy solicitation and communications firm based in Toronto. The agreement represents MDC’s first foray into the business of helping companies or major investors persuade shareholders to accept or reject a deal.
The tie-up is worth about $50 million, plus a payment contingent on how Kingsdale performs in the future, according to a person familiar with the matter who spoke anonymously because he was not authorized to speak publicly.
Kingsdale and its counterparts in the United States â€" including D.F. King and Innisfree M&A â€" operate behind the scenes in high-stakes corporate contests, advising their clients on shareholder sentiment and helping them craft a communications strategy. Though not a household name in this country, Kingsdale dominates its market in Canada, representing both corporations and prominent investors.
The deal comes at the same time as a rise in investor activism that is feeding demand for proxy solicitation firms. MDC, which has an office in Toronto but is based in New York, plans to help Kingsdale expand in the United States.
“The level of activist shareholder momentum and the amount of change in the regulatory environment is such that I just think the fundamental demand for financial communications, proxy solicitation â€" all that kind of expertise â€" is growing on an ongoing basis,†Miles S. Nadal, the chairman and chief executive of MDC, said on Tuesday in an interview.
MDC, a network of more than 50 marketing and communications firms, has been on a buying spree in recent years. From 2008 to 2012, the company spent more than $500 million on deals, picking up agencies including RJ Palmer and TargetCast TCM.
The company largely took a break from deal-making last year, “digesting†its acquisitions, Mr. Nadal said. But it has recently turned acquisitive again, and the Kingsdale deal is its third since December.
Founded in 2003, Kingsdale has had a role in some of Canada’s most prominent deals and proxy contests of recent years. It was hired by Pershing Square Capital Management in that hedge fund’s successful effort to shake up the board of the Canadian Pacific Railway in 2012. It worked with Jana Partners last year when that hedge fund sought unsuccessfully to install new directors at the Canadian fertilizer company Agrium.
In addition, the firm was hired by Petro-Canada and Suncor in the $15 billion all-stock merger of those energy companies in 2009. The Swiss mining company Xstrata (which is now part of Glencore Xstrata) hired Kingsdale in 2006 to assist in its $17 billion acquisition of Falconbridge.
“In MDC, we see the ideal partner to help accelerate the next phase of our growth and success, expanding our geographic footprint and responding to client demand for our strategic counsel in new areas where we have unique insight,†Wesley J. Hall, the founder and chief executive of Kingsdale, said in a statement.
Mr. Nadal said he was introduced to Mr. Hall in December by a longtime friend, Paul M. Stein, a lawyer at Cassels Brock in Toronto, and the two chief executives quickly hit it off. “It struck us that it would be a perfect fit for MDC,†Mr. Nadal recalled.
Now, Mr. Nadal, who in addition to running MDC is the controlling shareholder of the money management business Artemis Investment Management, which owns a fund of hedge funds, plans to use his personal network to help Kingsdale gain business.
In one sign of that effort, Mr. Nadal said heâ€" had already drafted a letter to 40 or 50 potential new clients for Kingsdale.
