Huntsworth's acquisition of central and eastern European consultancy MMD means the PR group now has the industry's ‘most comprehensive' European network, according to Huntsworth CEO Lord Chadlington.
The deal, first revealed on PRWeek.com on 19 October, sees Chadlington's acquisitive group initially paying £7.2m in cash and £4.8m via a share issue for MMD. The amount paid could rise to £35m in the next three years if MMD meets certain criteria.
The deal - unveiled simultaneously with news of an agreement to buy London corporate agency Quiller (see Related Stories) - gives Huntsworth a presence in markets including Russia, Turkey and Kazakhstan. MMD has 190 staff in 18 offices across central and eastern Europe (CEE).
MMD's Geneva-based chairman Alistair McLeish, who has been courted by major groups for many years, will continue to operate the business. MMD, whose brand will be retained, is best known for its corporate and PA consultancy. Clients include Mittal Steel, Rosneft, Visa International, Deutsche Telekom, GE and Intel.
Chadlington told PRWeek: ‘I have been talking to Alistair about this deal for almost two years. I am famous for taking a very long time over these things… I think most people [rivals] would have liked to have done this deal.'
Huntsworth's presence on the Continent has until now come via Trimedia Communications, which has 25 offices in 11 countries. Huntsworth has operated through affiliates and associates in CEE, south-east Europe and the former Soviet states.
Chadlington said there was no overlap ‘at all' between Trimedia and MMD offices, and that Huntsworth's new acquisition was a particular boon for Trimedia, which has ‘really been wanting' to expand eastwards.
On the potential of CEE, Chadlington said: ‘These are markets that will become important five to ten years from now. The real payment on this deal will come not now but in the future.'
For the year ended 30 June 2005, MMD - which was founded in 1993 in Prague, Czech Republic -had pre-tax profits of more than £2m. McLeish said: ‘I have known Peter Chadlington for years. I feel we couldn't have found a better umbrella under which to continue our growth.'
MMD has previously had strong affiliate relationships with a number of consultancies, including WPP's Burson-Marsteller. B-M last week unveiled a ‘strategic partnership' with CEC Government Relations (see Related Stories).
PRWeek sought the views of the European CEOs at Weber Shandwick and B-M on Huntsworth's MMD deal (see below).
Views on the acquisition
Heidi Sinclair, CEO, Burson-Marsteller Europe:
‘Alistair and MMD have been interested in being acquired for a period of time, so I am not surprised by the deal, just by the timing. This is just the beginning of the economic growth we expect to see in CEE. If I were in Alistair's position, I would have held out a bit longer before selling. Clients increasingly want a presence in CEE - it's a hot time for that part of Europe and I expect that to continue.'
Tim Sutton, Chairman, Weber Shandwick Europe:
‘For many years Alistair McLeish saw an opportunity in CEE when most global firms stayed out. The competition is going to get tougher for MMD as the big firms - my own included - continue to move into the region. If Alistair is still involved long term, MMD can probably hold its own - Huntsworth needs to make sure it doesn't lose him.'
MMD has 18 offices in central and eastern Europe, employing 190 staff across the group