Engine on expansion drive

With the ink not yet dry on Engine Group's swoop for Penrose Financial on Tuesday (prweek.com/uk, 13 April), the UK marcoms group has pledged to continue aggressive expansion by moving into key international markets.

Penrose Financial became the latest addition to the Engine Business stable this week in a cash-and-equity deal that saw Engine acquire 100 per cent of the share capital of the City firm.

The group is understood to be eyeing acquisitions or the establishment of its own offices in Brussels, as well as key emerging markets in Asia and South America.

This international growth is expected to be completed in 18 to 24 months and will involve the expansion of both the Engine Business brand and the group's wider full service offering.

Sacha Deshmukh, CEO of Engine Business, said: 'We certainly have the capability to invest, but we'll only do it when it's absolutely right.'

The Penrose partners - including founders Gay Collins, Andrew Nicolls and Shona Prendergast - will become Engine shareholders as a result of the deal but are not believed to be on an earn-out. Collins will also become a board director at Engine Business.

Penrose and Engine had been discussing a tie-up for more than three years, with Penrose likely to have had to accept reduced terms in comparison with peak valuations.

PRWeek figures published next week will show Penrose's fee income fell by 21 per cent during 2009, while Engine's grew by almost 50 per cent.

One source said: 'This deal won't give the Penrose founders what they are looking for unless Engine itself is sold for a good price in the next upturn.'

Engine had previously been in discussions with City firm Pelham PR before it merged with Bell Pottinger Corporate & Financial, but Deshmukh insisted those talks did not influence the decision to press on with the Penrose deal.

'We had particular interest in Penrose because of its unique position in the financial services and capital markets sectors,' he said.

'We continue to look at possible acquisitions related to our financial business for quoted companies.'

Engine already owns mid-market specialist Hogarth, but has no plans to integrate it with its new acquisition.

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