LONDON: Grayling owner Huntsworth has agreed to sell a 19.8% stake in its business to China-headquartered PR group BlueFocus, which it claimed would reduce debt and enable investment.
The transaction will require Chinese regulatory approval, which Huntsworth does not expect to go through until this October.
“This relationship will help Huntsworth achieve further growth and the investment will also significantly reduce our debt and therefore enable further investment in the engines of our growth in the coming years,” said Huntsworth CEO Peter Chadlington.
Oscar Zhao, CEO of BlueFocus, which Huntsworth said is Asia's largest PR group, will join the Huntsworth board.
BlueFocus was established in 1996. It has 29 offices, 24 of which are located on the Chinese mainland, and it serves nearly 900 clients and employs about 2,000 people. It reported 2012 revenue of approximately $359.8 million
While its revenues are slightly higher than those of Huntsworth, its value on the Chinese stock market is much greater than that of Huntsworth on the UK market.
Chadlington denied claims that Huntsworth had nearly acquired BlueFocus in 2006. He said he and Zhao have been friends for eight years and had explored many different ways of working together.
“'We can now offer global support to Chinese companies through the international Huntsworth network and provide our clients with in-depth service in China using the largest available Chinese PR network,” Chadlington said.
Zhao added that “Huntsworth provides our Chinese clients with a global platform to expand.”
“We believe that Huntsworth's unique mix of public relations, healthcare, and digital communications will prove invaluable to many Chinese businesses,” he said. “These are the first steps in establishing a genuinely global public relations service.”
Huntsworth and BlueFocus have also struck a strategic alliance focusing on four key areas: exchange of clients, exchange of skills, exchange of people, and joint expansion into new markets.
Huntsworth's key businesses are international PR consultancy Grayling and healthcare agency Huntsworth Health. It also owns corporate specialist Citigate and UK agency The Red Consultancy.
The holding company announced the transaction with its financial results for last year, which showed pre-tax profits rose 17.4% to about $34.7 million. However, revenue fell 0.3% on a like-for-like basis to approximately $267.2 million.
Net debt was down 5.9% from the end of 2011 to about $103 million by the end of last year.
Grayling, the largest part of the group, was hit by a 3.1% decline in like-for-like revenue to $128.9 million. Citigate fared worse in a difficult climate for London PR firms, suffering a 10.5% drop to about $35.2 million.
However, Huntsworth Health offset the gloom with a 6.8% rise to $81.7 million and The Red Consultancy outpaced that, growing 11% to $21.5 million.
High-profile client wins from 2012 included Marks & Spencer and the UN Intergovernmental Panel on Climate Change.
Note: All figures were converted from British Pounds Sterling to American dollars using the XE currency exchange calculator.
This story originally appeared on the website of PRWeek UK, the sister publication of PRWeek at Haymarket Media.