WPP and Providence Equity Partners, a New York-based global private equity firm, have launched a $550 million takeover bid for London-based Chime Communications, owner of VCCP, the U.K.'s sixth biggest agency according to Nielsen figures.
Chime has confirmed that it will recommend shareholders accept the bid, sending the company's share price up by more than 25% since the announcement this morning. WPP already has a 20% stake in Chime, and the Financial Times reported that WPP plans to keep its stake at about 20%. That would make Providence the majority investor.
VCCP clients include telecoms giant O2, Coors, ING Direct, EasyJet, Vans, Wal Mart-owned Asda, and comparethemarket.com, for which the agency created the iconic and long-running "Meerkat" campaign.
Chime Communications owns 56 agencies and is now mostly known as a sports marketing specialist. WPP has been building its sports marketing portfolio and earlier this year led a $250 million investment in start-up Bruin Sports Capital. One of Chime's agencies, CSM Strategic, advises on bids for sports events, including London's successful pitch for the 2012 Olympics.
Providence focuses on media, communications, education and information investments. The private equity firm already has a portfolio of sports agencies, including Ironman, an international triathlon competition, Learfield Sports, and Yankees Entertainment & Sports Network. And Providence is a partner in the private equity consortium that bought U.S. Spanish-language media giant Univision Communications in 2007 for more than $10 billion. They may soon be exiting that investment; Univision Holdings filed in early July for an initial public offering.
In a statement, Chime Communications stressed there is "no certainty" the deal will go through. Under the U.K.'s Takeover Code, WPP and Providence have until Aug. 26 to agree a formal offer with Chime. WPP chose not to comment.
Apart from WPP's 20% stake in Chime, the two businesses have some shared history. Chime was founded in 1989 by Tim Bell, who was managing director of Saatchi & Saatchi in the 1970s, at the same time that WPP CEO Martin Sorrell was the agency's finance director. In his heyday, Mr. Bell was a close advisor to Prime Minister Margaret Thatcher. Mr. Bell stepped down from Chime in 2012.
Chime reported pre-tax profit of $47 million in 2014, up 6% on the previous year. Income was $310 million.