Under the agreement, still subject to shareholder approval, the agency will be bought for £1.6m but Huntsworth will also take on hatch’s bank debts estimated at just over £1m.
The initial £1.6m is made up of £65,500 in cash with the balance met by the issue of 15,695,000 shares in Huntsworth. That represents around 8 per cent of Huntsworth.
A further sum of £1.3m is on offer to hatch shareholders and staff depending upon future financial performance.
Backed up by £20m mainly from venture capitalist Bridgepoint Capital, hatch burst onto the PR scene when it bought media specialist MacLaurin in 2001 for £3.5m.
The firm’s goal was to establish a business that would assume a top 10 UK PR spot in three years.
Since then it established hatch Scotland, hatch Midlands, hatch Public Affairs and Prospero Financial. It also bought Connors Communications and has a portfolio of 60 clients including Diageo, Disney and Opodo.
Hatch CEO Michael Murphy and his senior team, which includes MacLaurin MD Vikki Stace, are to retain day to day management of Hatch.
Since its launch hatch has started to lose money, but Huntsworth expect Hatch to break even this year.
Unveiling the move, Huntsworth CEO Lord Chadlington ruled out job cuts despite geographic overlap within existing divisions such as Harrison Cowley.
The move comes three months after MacLaurin Media chairman Brian MacLaurin and MD Ian Monk announced their double departure from Hatch (PR Week, 27 March).
Commenting on hatch’s future goals, Murphy said: ‘It became clear that if we merged our interests we could achieve our ambitions much quicker.’