Providence and WPP in talks on Chime deal

Chime Communications, the London-listed sports marketing specialist, is in advanced discussions to sell itself for more than £350m to Sir Martin Sorrell’s WPP and US buyout group Providence Equity Partners.

Chime said that an independent committee of board members had been convened to discuss a cash offer for all its shares at 365p per share. That would represent a premium of more than 30 per cent to the company’s closing share price on Wednesday of 274.5p.

The group’s shares jumped 27 per cent to 346p on Thursday morning.

In its statement to the London Stock Exchange, Chime cautioned “there can be no certainty” that WPP and Providence will proceed to make an offer.

WPP, the world’s largest marketing services group, already owns about 20 per cent of Chime. It plans to retain this stake, without putting in any new money, and to work closely with Providence to expand Chime after taking the company private.

Founded in 1989 by Lord Bell, Chime owns 56 agencies including VCCP in advertising and Open Health in healthcare communications. But in recent years the company has become best known for its expansion to become a significant player in the sports marketing world.

Chime’s sports agencies include CSM Strategic, which is headed by Lord Coe and advises countries on sporting bids, including London’s pitch for the 2012 Olympics. Another unit, Just Marketing, which Chime bought in 2013 and is headed by Zak Brown, does marketing for motorsports including Formula 1.

For Providence, the acquisition of Chime would add to its growing portfolio of sports-related investments. These include: Learfield Sports, a college sports rights and marketing agency; Yankees Entertainment & Sports Network, a television network; and Ironman, an international triathlon competition.

WPP is also rapidly expanding its sports businesses. In May, the company set up an agency called ESP to represent the likes of the Cleveland Cavaliers basketball team, Manchester City of the English Premier League, and the England and Wales Cricket Board.

Previously, WPP invested in Bruin Sports Capital, which aims to spend $250m buying sports rights. Bruin is led by George Pyne, the former president of IMG’s sports and entertainment division.

Chime is chaired by Lord Davies, the former UK trade minister and former chairman of Standard Chartered. Lord Bell resigned as a director of Chime in 2012, after a buyout of public relations outfit Bell Pottinger.

Steve Liechti, analyst at Investec, said that the acquisition price suggested by Providence and WPP — which values Chime at about 16 times its 2015 earnings — “looks reasonable in our view versus current market levels and peer multiples”.

WPP declined to comment. Providence could not immediately be reached for comment.