In a deal that involves three of the most well-known figures in the British communications industry, a top independent London ad agency, Howell Henry Chaldecott Lury + Partners, is selling to Sir Tim Bell's public relations-driven Chime Communications for $51 million in cash and stock.
WPP Group is effectively bankrolling the deal by coming in as a third partner, buying a 29.9 percent stake in Chime for about $24 million. Under U.K. trading laws, that holding is the maximum allowed before WPP must bid for all outstanding shares.
WPP chief executive Martin Sorrell and powerbroker Bell both worked with Maurice and Charles Saatchi in the 1980s.
Chime has been publicly traded for the past three years, but its flat stock performance has frustrated expansion efforts. Rupert Howell, founder of 10-year-old HHCL, has also had his international ambitions stymied by the agency's lack of resources and media buying capabilities, even though his shop has enjoyed a strong creative reputation at home.
"The key part of this deal is WPP," said Piers Pottinger, Chime's chief executive who will now share that role with Howell. "It enables HHCL and ourselves new international resources through [WPP's] Ogilvy & Mather, JWT, Hill & Knowlton, Adams & Rinehart. We feel we can really start moving overseas. We're very serious about America."
HHCL executives could receive an additional $4.8 million based on the agency's 1998 profits.