Lord Bell plots MBO targeting Bell Pottinger brands

Lord Bell and Piers Pottinger are attempting to buy back parts of Chime's PR business to create a privately-owned corporate and political reputation specialist.

Lord Bell: chairman of Chime Communications
Lord Bell: chairman of Chime Communications

PRWeek understands that the prospective management buyout, announced to the market on Tuesday lunchtime, is specifically targeting Bell Pottinger brands, including Public Affairs, Sans Frontières, Issues & Crisis and Pelham Bell Pottinger.

Other Chime PR brands such as Good Relations, tech agency Harvard and sports marketing specialist Fast Track are expected to remain within the group.

However, Bell insisted that the process was in its early stages and ‘none of these decisions has yet been taken’.

‘This concept is being conducted in a completely amicable environment,’ added Bell. ‘What will drive the transaction will be arriving at a deal in the best interest of Chime and its shareholders.’

Richard Nunn, an analyst at Charles Stanley said that the news may reflect a difference in strategic focus at Chime. He said: ‘Chime’s recent market comms give the impression that it was easing back on PR, previously a mainstay of the business… Strategically, its eye is no longer as focused on PR.’

Chime has certainly grown its sports marketing business significantly in recent years, including a number of international acquisitions, and has seen strong growth in its advertising division VCCP.

Chime’s PR division as a whole generated fee income of £32.6m in the first half of 2011 and an operating profit of £7.8m.

Equity analysts speculated that usual market multiples would value the division at about £80m, though the mooted MBO is thought to be worth significantly less, given it entails only a portion of the PR business.

Late last year, Chime announced it had lost its multi-million-pound contract with the US State Department and had been forced to cut staff and property costs.

Malcolm Morgan, an analyst at KBC Peel Hunt, said the firm was likely to have ‘experienced frustration’ over its falling share price and the recent Independent sting, and these issues were perhaps ‘easier weathered off-market’.

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