The deal, which is classed as a reverse takeover for SEC under AIM rules and is subject to approval by SEC shareholders, is set to be completed no later than 30 September. The plan is to float the combined operation on AIM.
The merger is set to create a business with global fee income of around €80m, with offices in the UK, Europe, the Middle East, APAC and South America, and a workforce of more than 550. The valuation figure is what has been reported
Porta agencies include London-headquartered Newgate, which last year merged with sister agency Redleaf; Publicasity, another London shop; Engage Comms of Australia; and advertising and marketing agency 2112.
SEC – which acquired a 19.3 per cent stake in Porta for £3m in 2017 – includes London public affairs specialist Newington, plus agencies in Italy, Spain, Belgium and Germany. In a statement to AIM, the merger "represents a value of approximately 0.88 pence per Scheme Share based upon the SEC Closing Price on 7 June 2019, being the latest practicable date prior to the date of this announcement, valuing Porta at approximately £4.46 million".
Porta's share price has declined steeply in recent months, from a high of almost 2.4p in July 2018 to below 0.5p prior to the merger announcement. Shares rose slightly following the announcement and closed at 0.55p on Thursday (13 June).
Contacted by PRWeek after merger talks were announced in April, SEC chief executive Fiorenzo Tagliabue said he was unable to comment on whether there were plans to merge agencies within the group.
However, a well-placed source said: "Of course we will progress on this project of merging. We will have a unique brand."
Porta executive director Gene Golembiewski told PRWeek at the time: "Both companies have to do their own due diligence on the other. It will be a process, and part of that process will include looking at potentially a combined brand, but that remains to be seen."
A new statement to the stock market highlights the "potential for further synergies".
Tagliabue said: "The merger of Porta and SEC will benefit both SEC and its existing global development plan, growing the business and expanding commercial reach and knowledge. The Porta business complements the existing SEC footprint and reach.
"I believe this combination has a solid basis derived from nearly two and a half years of commercial partnership between SEC and Porta with the potential for further synergies. The combined group will be better equipped to compete globally, with an expanded commercial and technological product base to deliver added value strategic advice to our clients."
Porta chairman John Foley said: "The bringing together of these two organisations will create a strategic communications group of scale that has global reach but, importantly, key local market expertise.
"The combined group will create a top 30 global firm that can offer what we believe our clients are increasingly seeking - c-suite strategic communications advice through a genuine integrated offering across research and insights, financial and corporate communications, public affairs, stakeholder engagement, public relations and digital communications."