Cordiant PR firm in £25m management buyout deal
LONDON - Partners in the financial public relations firm Financial Dynamics are to take a 10% stake in the outfit as it prepares for its £25m management buyout later this week from crisis-hit parent Cordiant.
The long-talked-of buyout is being supported by Advent International, which also backs music chain HMV. The price, which is likely to be nearer £25m than £30m, represents a multiple of just five or six on FD's pre-tax profits, which are estimated at £5m.
However, one insider recently said that the management buyout team might get the firm for less. "They may even get it cheaper," the source told PR Week. "It could go in a fire sale."
The buyout is being led by FD CEO Charles Watson, who is set to take the largest equity stake of the City PR firm's 25 executives, who also include Alex Child-Villiers, Tim Spratt, chief financial officer Dana Mulvihill, chief operating officer Steve Jacobs and international business development director Declan Kelly.
Details of the buyout emerged following Friday's news that Cordiant has agreed financing arrangements with its banks until July 15.
The ad group, which is currently in talks with several potential bidders, reached an agreement in principle with its lenders earlier this month and has now signed a "definitive agreement" to continue funding.
This morning, shares in the company were 9.25p, up 7.14% or 0.5p, having wallowed at 8.75p at the end of last week. They had hit just 7.5p at one point after the troubled ad group admitted that none of the offers currently on the table were "likely to result in an offer" at its current share price.
Publicis Groupe, the French advertising giant, is one of the possible bidders that has been in talks with Cordiant. However, with the loss of its £18m Allied Domecq account, Royal Mail and Woolworths in the UK, and Hyundai and Wendy's globally, there is debate over how much the firm is actually worth.
It did receive some good news last week from BSkyB, which despite speculation has said it has no plans to move its account out of Cordiant shop Bates UK.
As well as the sell-off of FD, Cordiant is currently pressing ahead with the disposal of other assets including its 25% stake in ZenithOptimedia to Publicis, its German ad agency Scholz & Friends and George Patterson Bates, the leading Australian advertising agency.
The sale of George Patterson Bates had looked like it was in trouble after it appeared that the agency might lose its flagship telecoms account Optus.
However, George Patterson Bates pulled off what is being described as something of a coup down under when it pulled out of the Optus pitch, which had become price-centric, and instead picked up rival Aussie telecoms firm Telstra and its direct marketing business, which is now being factored into negotiations with investment firm Pacific Equity Partners.
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