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WPP share purchase helps Chime fund £30m VCCP acquisition

LONDON - Chime Communications has confirmed it will pay up to £30m in a cash and shares deal to acquire the advertising agency VCCP, and that WPP Group is investing in a new share issue to help fund the deal.

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Chime will pay £14.5m up front, with £15.5m payable later, depending on VCCP meeting profit targets. Half of the £14.5m will be paid in cash and the rest in shares, which VCCP directors will not be allowed to sell for 18 months.

It plans to raise around £5.3m to pay for the VCCP with a proposed share placing at 26 pence a share. Chime said that WPP North Atlantic, a subsidiary of WPP, has agreed to acquire 11.5m shares in the new placing, should it get the go-ahead at an extraordinary general meeting on July 19.

The acquisition of VCCP will shore up Chime's marketing services division, which has a comparatively rough time compared with its public relations division. The deal will see VCCP take over the management of some of Chime's existing marketing services businesses, which could include Heresy.

Lord Bell, chairman of Chime, said: "We are very pleased at the successful acquisition of VCCP. It is a fine company and will make a real difference to our marketing services division. Our prospects are considerably enhanced by this move."

VCCP was founded in 2002 and has gone on to become a successful start-up, counting O2, Coca-Cola and Hyundai among its clients. Reports say that it wanted to do a deal with one of the holding companies to reduce its dependence on O2, should the client ever decide to move some or all of its business to another agency.

As well as advertising, it offers digital marketing, direct marketing, sales promotion and brand consultancy.

Chime's other businesses include the public relations agencies Bell Pottinger, Good Relations and Resonate, along with the ad agency Heresy, created out of last year's merger of Roose & Partners and Will Pond-Jones Collective. It also owns a stake in HHCL/Red Cell, with the remainder owned by WPP.

It said today that it was looking for other acquisitions and new investment opportunities to help improve growth prospects.

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