Chime Agrees to Sell to WPP/Providence for £374m

WPP and buyout specialist Provident Equity Partners have agreed to buy UK marcoms group Chime Communications for approximately £374m, just a day after announcing that the bid was being discussed.

London-headquartered Chime was founded in 1989 by Margaret Thatcher's media adviser Lord Bell. It is the holding company for a portfolio of companies which include PR, advertising, digital, marketing, research, corporate responsibility and design. Its Insight & Engagement Group (CIE) includes digital specialist Watermelon, qual recruitment arm CherryPicked, fieldwork agency Facts International, and full service agency Opinion Leader.

Chime's share price rose by 26% in early trading yesterday after it was revealed that the firms were discussing the buyout deal, and they then opened up 4.5% at £3.60 this morning. Terms of the deal include Chime shareholders receiving £3.65 in cash for each of their shares, and those on the firm's shareholder register on 11 September will be entitled to an interim dividend of 2.53 pence per Chime share.

WPP and Provident are buying Chime through Bidco, a newly incorporated vehicle controlled by funds managed by Providence. WPP will acquire an indirect minority interest in Bidco in exchange for transferring its existing 20% stake in Chime to Bidco's parent, Bell Topco, and Providence will finance the deal through cash and debt finance.

On completion of the transaction, Chime will be delisted from the London Stock Exchange. Commenting on the offer, Chime Chairman Lord Davies of Abersoch (pictured) said: 'To fulfil Chime's considerable growth potential, significant new capital is required. Providence and WPP offer Chime both the capital and the industry expertise to fast-track our ambitions, and taking this into account, Chime's independent directors unanimously recommend that shareholders vote in favour of the resolutions.'

Web sites: www.chimeplc.com and www.wpp.com .