Arun Sudhaman 30 May 2012 // 11:00PM GMT
LONDON--Chime Communications has today revealed terms for the high-profile MBO of Bell Pottinger from the group.
A new entity called BPP Communications, led by directors Lord Tim Bell and Piers Pottinger, are to acquire a number of Bell Pottinger brands for a sum total of £19.6m. Both Bell and Pottinger are to resign from Chime's board.
The owners of BPP Communications will be Lord Bell, David Beck, Jeremy Deedes, James Henderson, John Leece, Tom Mollo, David Wilson and "certain other executives involved in the management of the Bell Pottinger businesses." Pottinger is not named as an owner.
The brands are: Bell Pottinger Public Relations; Chime's 60 percent stake in Pelham Bell Pottinger; Bell Pottinger Public Affairs; Bell Pottinger Sans Frontières; and Bell Pottinger Middle East.
In addition, BPP Communications will acquire the 40% stake in Pelham Bell Pottinger held by senior management.
Following the disposal, Chime's remaining public relations businesses, including Good Relations, Harvard, Corporate Citizenship, Insight and Ptarmigan Bell Pottinger, will be organised under the Good Relations Group.
The Good Relations Group will be headed by current Bell Pottinger Group chairman Kevin Murray.
The deal price includes £14.9m in cash, and a stake of 25 percent that Chime will hold in BPP Communications.
According to a Chime statement: "Chime has agreed with BPP Communications certain liquidity rights in relation to its equity holding in BPP Communications but at present has no intention of seeking to sell its holding. Chime has the right to appoint a director to the board of BPP Communications and this will initially be Mark Smith."
"The total consideration of £19.6 million represents a multiple of eight times the 2011 profit before interest and tax of the Bell Pottinger businesses (as adjusted) which the directors of Chime believe is an attractive multiple relative to trading and transaction comparables."
The deal remains subject to shareholder approval. A general meeting is scheduled for 18 June, with the split expected to take place by the end of that month.
"The disposal is a natural evolution given the planned repositioning of the group and is a key part of our future growth plan," said Chime CEO Christopher Satterthwaite. "When completed, the Group's growth prospects will be strong with a good acquisition pipeline, including international opportunities, already identified and funds available to make these acquisitions."
Chime will seek to invest the proceeds of the sale in its faster growing businesses: sports marketing, digital communications and healthcare communications. It will also retain a public relations business, including Good Relations, that it will aim to grow "organically and by investment."