LONDON—Huntsworth Group, the public relations holding company led by Lord Peter Chadlington, is merging with Incepta—parent of U.S. firms Citigate Sard Verbinnen and Citigate Cunningham—to create a $300 million PR holding company with 3,000 employees in offices around the world.
The new company will operate under several brands, including Huntsworth’s existing units: Trimedia, which is strongest in the German speaking nations of Europe but has a growing U.K. presence; Global Consulting Group, which specializes in corporate and financial communications and public affairs, and is led out of the U.S. by Richard Wolff; and Grayling, a British firm with consumer and public affairs capabilities.
They will now be joined by several Incepta operations: Citigate Dewe Rogerson, a British-based financial communications specialist; Citigate Sard Verbinnen, one of the leading players in the U.S. crisis communications and mergers and acquisitions business; Citigate Cunningham, a technology PR firm; and The Red Consultancy, a U.K. consumer shop that recently opened an office in New York.
The new company will be led by Chadlington—who as Peter Gummer founded and built Shandwick into a leading global player—as executive chairman, with Incepta’s Richard Nichols as chief executive and Huntsworth’s Roger Selman as finance director.
“The marketing and communications sector has experienced significant consolidation in recent years,” said the two firms in a statement announcing the merger. “As a consequence there has been a polarization between the large businesses offering international scale and breadth of service and smaller niche players. Both Huntsworth’s and Incepta’s boards believe that a greater critical mass and international presence will substantially improve the group’s ability to attract and retain large clients and highly regarded industry talent.”
Chadlington also pointed to complementary geographic strengths: Huntsworth is strong in central Europe, with major operations in Germany and Switzerland, while Incepta has strength in Germany, France, and the Netherlands, and both have operations in Brussels. In the U.S., there will be operations in New York, Chicago, Los Angeles, Boston, Silicon Valley, and Austin, Tex. And Incepta has significant Asian operations, which will beef up Huntsworth’s satellite operation in that region.
Says Nichols, “We believe Huntsworth is a compelling partner for Incepta and our merger will create a Group with real international scale, outstanding brands and a blue chip client base. In our discussions over the last year it has been obvious how complementary our businesses are and that a merger would further our ability to attract and retain people of the highest quality, with all the benefits that will bring for our stakeholders.”
Despite the global reach, however, the merged firm will generate a disproportionate amount of its revenues from the U.K., with the U.S. under-represented, and Chadlington acknowledged that over time the new company would need to look at additional acquisitions in the U.S., with Washington, D.C., an obvious priority.
The first priority, however, is a thorough strategic review of the firm’s existing resources. Incepta carries about $120 million in debt, and reducing that will be a priority.
“Our wish is to reduce that debt over six to nine months,” says Chadlington. “We will be taking a very close look at what we have, and considering our options. We might be able to accomplish our objective by improving margins or we may be able to look at selling subsidiaries or floating one or more of them off.”
In addition to the core public relations operation, the new group will include about $100 million in revenues from other marketing services.
“Most marketing services groups have advertising at their core,” says Chadlington. “We are a marketing services group with public relations at its core. That’s a focus we need to develop to differentiate ourselves in the market.”
Based on closing prices on March 2, the last trading day before the announcement, Huntsworth and Incepta’s aggregate market capitalization was approximately £195.4 million. And based on the issued share capital of the two companies, Huntsworth shareholders will hold approximately 32.8 percent and Incepta shareholders will hold approximately 67.2 percent of the combined group.