For those who – like me – have been following the buyout shenanigans at Chime with some bemusement, the following item from Bob Willott’s Marketing Services Financial Intelligence will be of more than passing interest:
Chime Communications confirmed yesterday evening [Friday last] that long-term shareholder WPP has continued its recent buying of shares so that it now holds over 20 per cent of Lord Bell’s group. By exceeding the 20 per cent threshold, WPP is now entitled to increase its board representation at Chime from one to two nominees. Share buying activity by WPP was first reported by the industry research publication Marketing Services Financial Intelligence last December, noting that WPP’s holding had risen above the historic level of 15 per cent.
According to Marketing Services Financial Intelligence, the buying was attributed by Chime insiders to an attempt to restore WPP’s stake after it had been diluted by various share issues to vendors of companies Chime had acquired. “However, that explanation began to lack credibility as the share buying has continued”, commented editor Bob Willott. WPP is not under any obligation to make an outright bid for Chime unless its shareholding passes the 30% mark. Willott thinks that WPP’s share buying may have been influenced by the attempt being made by the two senior Chime board members Lord Bell and Piers Pottinger to buy out some of the group’s public relations business.
No kidding. As is well known, WPP is by far the largest stakeholder in Chime – and its boss, Sir Martin Sorrell, has been an outspoken critic of the Bell buyout.
I addressed this very issue of motive to WPP. Why was it stealthily upping its stake? “Good investment” came the cryptic reply. What, even if Tim Bell, Piers Pottinger and the best bits of the PR business were to leave? “Either way.”
Question: Does the inception of the Bell/Pottinger buyout plan predate or postdate knowledge of WPP’s share buying activity?