Citigate Communications, ranked eighth in the PR Week Top 150, is to
merge with listed sales promotion and publishing company Incepta Group
in a reverse takeover deal.
The deal was announced on Wednesday and values Citigate - which derives
about 30 per cent of its fee income from PR - at around pounds 29
million. It will make millionaires of two directors: Citigate chief
executive David Wright, whose stake is valued at pounds 2.5 million, and
soon-to-retire non-executive chairman Andrew Campbell-Harris.
It takes the form of an all share transaction involving the maximum
issue of 133 million Incepta shares (328 Incepta shares for every one
Citigate share). This is subject to Citigate achieving pre-tax profits
of pounds 3 million for the year to 30 September 1997 - a 40 per cent
jump on this year’s figure of pounds 2.15 million.
Wright had made no secret of his plans to float Citigate once it had
reached pounds 4 million pre-tax profit. The decision not to wait was
prompted, said Wright, by his plans for further growth including
acquisitions in North America, Singapore and Malaysia.
‘If we are to become a really global player, to build the international
part of the business, we felt we needed to become a public company,’
Incepta, formerly WMGO Group, has three main divisions: sales promotion
company LGM, exhibitions company Park Avenue and contract publisher
Mediamix. It is currently capitalised at pounds 14.4 million and
reported profits of pounds 1.07 million for the six months to 31 August
1996, compared with a loss of pounds 304,000 for the same period last
Wright and Citigate finance director Kevin Steeds keep their roles
within the enlarged company, while Incepta chief executive Graham Green
becomes deputy chief executive and Bob Morton remains non-executive
Wright said the fit between the two companies was good, adding: ‘They
[Incepta] have tidied up the company, there are no management issues’.
Several other members of the Citigate’s board - who between them hold 35
per cent of the equity - will see their stakes valued at over pounds