Agency: JWT, New York
In a interim management statement released at lunchtime today, Chime said that the main terms had been agreed for the Lord Bell-led MBO of a number of businesses in its PR division.
As revealed by PRWeek when news of the MBO first broke in January, the businesses included in the deal are all constituents of the Bell Pottinger brand.
The businesses included in discussions are Bell Pottinger Sans Frontieres, Bell Pottinger Public Relations, Bell Pottinger Middle East, Bell Pottinger Public Affairs, Chime's 60% and the 40% management stake in Pelham Bell Pottinger.
Other Chime-owned PR businesses, including Good Relations, Teamspirit, tech agency Harvard and sports PR and marketing specialist Fast Track are expected to remain within the group.
Chime said that it would retain a 25% minority stake and that the transaction ‘is expected to be accretive once proceeds are reinvested’.
Chime stated: ‘The terms of this transaction have been agreed and are based on 2011 profits. Its completion remains subject to the finalising of financing arrangements and the completion of due diligence.’
It is expected that agreements will be signed before the end of May with a circular being sent to shareholders shortly thereafter, meaning that the shareholder meeting will take place in mid-June with completion expected to take place at the end of June.
If the MBO is completed, Chime said it will reinvest the proceeds in sectors of the market which are ‘expected to show good growth’. Industry observers expect Chime to continue its heavy investment in sports marketing, which has achieved 50% growth for Chime so far this year.
The group acknowledged that it is pursuing a 'transition strategy' from being a PR specialist to being a 'communications and sports marketing business'.
The decision to press ahead with the transaction comes despite the misgivings of WPP CEO Martin Sorrell. WPP owns 20% of Chime. Last month Sorrell said that Bell’s attempts to buy back a portion of Chime’s PR business represented ‘a bad deal for Chime’.
In its statement today, Chime said that its PR division has seen a decline in revenue and profit so far this year which, together with the ending of the sizeable American government contracts, means that it does not expect the division to hit full-year forecasts.
Lord Bell, Chairman of Chime, said: ‘Trading during the year so far has been satisfactory within the sports marketing, advertising, research and healthcare businesses, but we are forecasting a decline in revenue and profits in the public relations business which will affect the full-year results.
‘Given the profit decline in public relations and a rebalancing of sports marketing profits caused by the Olympics, group profits will be second half weighted.’
This article was first published on prweek.com
AllThingsD is reporting that last week’s rumoured deal that would see Yahoo pay as much as $1bn buy Tumblr is set to become a reality and will be announced officially on Monday.