The planned management buyout by Lord Bell, pictured, of Bell Pottinger today moved a step closer as parent company Chime Communications agreed a £19.6 million price for the troubled public relations firm.
But the sale needs approval by at least 50% of shareholders in a vote on June 18 and Chime’s top investor, Sir Martin Sorrell’s WPP, declared its continued strong opposition.
The £19.6 million price is eight times 2011 profits. Bell Pottinger hit the headlines last years in a lobbying scandal when staff boasted to undercover journalists about their use of “the dark arts”.
Bell’s new company, BPP Communications Limited, will pay almost £15 million in cash.
Chime will retain a 25% stake and chief executive Chris Satterthwaite declared: “I think shareholders will be supportive.”
But Sorrell, whose firm holds 20%, said the valuation should also take into account turnover of £29 million.
“It seems strange to sell a significant operation at two-thirds of revenues,” he said, adding: “Why keep 25% unless it’s to make the transaction easier for management? It sets a terrible precedent.”
Satterthwaite said: “We’re keeping 25% because we share some clients and we think it’s a solution for the time being. We value companies on profits.”
He maintained the sale is good for Chime as it focuses on sports marketing and advertising but it also keeps PR arm Good Relations.
