LONDON, May 4—In August of last year, 97 percent of the shareholders of U.K. marketing services company Huntsworth voted at an extraordinary general meeting to elect Lord Peter Chadlington, Anthony Brooke and Jon Foulds to the company’s board. Chadlington, six months removed from his position as chairman of Weber Shandwick Worldwide became CEO immediately, but pledged not to start drawing a salary until the company resumes dividend payments.
He won’t see his first paycheck for a while—Huntsworth announced an operating loss for the 15-month period ended December 31 of £1.7 million on revenue of £11.4 million—but he has already started doing what Huntsworth’s investors expected him to do when they voted him into office. This week he announced plans to raise £13.6 million for acquisitions, including three PR firms that together could lift Huntsworth into the U.K. top 20.
According to Jon Foulds, the company’s chairman, “We are confident that Huntsworth is now on a sound financial footing and that we have the management and professional staff in place to build a stronger business. We have continued to develop the business organically by winning a number of important new clients and our aim is to broaden our base by pushing into other high growth markets such as healthcare and technology.”
Says Chadlington (the former Peter Gummer), “We have got the business into good shape, and we have brought in some very good new shareholders.”
Huntsworth plans to raise £8.8 million by placing 37.7 million in new shares, and a further £4.8 million through an open offer of 18.3 million new shares to shareholders. Among those taking a stake in the company are Simon Robertson, president of Goldman Sachs Europe; his colleague Richard Sharp; and Michael Marks, chairman of Merrill Lynch Europe. Lloyds Ventures and 3i have each subscribed for £2 million in shares.
Chadlington says he will use the money to pay off £7.5 million of debt and for the acquisition of three boutique public relations firms: Stephanie Churchill PR, PBC Marketing, and Woodside Communications, which will be added to the group’s existing PR operation, Counsel Public Relations to create an organization with about £11 million in PR fee income. (Huntsworth also owns the design firm Holmes & Marchant.)
Counsel is best known for its work in the food and nutrition sector, serving clients such as Heinz and John West. Stephanie Churchill is a consumer-marketing firm with particular expertise in fashion and youth marketing and a client list that includes Max Mara. PBC Marketing is a healthcare communications agency that includes advertising and strategic research capabilities. And Woodside is a technology specialist headed by former Financial Times reporter Roy Levine, who also worked at Shandwick before starting his own agency. Its clients include Xerox.
“We want to look at some high growth markets, including healthcare, technology, public affairs and investor relations,” says Chadlington, who says he has received numerous telephone calls from individuals and independent agencies since he joined Huntsworth at the end of last summer. “There are a lot of people out there who would like to be part of something that is starting from scratch, to help build a major new public relations firm.”
His first priority, once these three deals are concluded, is likely to be establishing a presence in the financial communications business. “If you look at the people who are investing, these are people who are heavily involved in the City of London and who can help us tremendously in the financial markets.” He says Huntsworth could break into the IR sector by acquiring a financial communications specialist, by hiring a team of talented professionals, or by acquiring a broad-based corporate and public affairs firm and bolting on an IR capability.
As for his international ambitions, they are on hold until the U.K. company is quite a bit larger than it is today. “We did a lot of things wrong at Shandwick, and hopefully we have learned from them, but we also did a lot of things right, and one of the things we did right was build a very solid base in the U.K. before expanding overseas. We have had calls from agencies in Europe and the United States, expressing an interest in partnering with us, and we have clients who need international help, but my first priority is to get into the top 10 in the U.K. as quickly as we can.”