WPP Considers Selling 20% Stake in Chime

WPP is exploring the sale of its 20% stake in Chime Communications, after the latter announced it is to acquire motorsports marketing firm Just Marketing International (JMI) for £43.7m, and partly finance the deal through the sale of 8.5 million new shares to financial institutions.

Chime announced on Friday that it had agreed to acquire JMI, and integrate the firm into its CSM Sports & Entertainment business. The marcoms group said it planned to raise £25.6m by selling the new shares, but WPP, which also owns about 20% of JMI, expressed its concerns about the takeover.

WPP's Finance Director Paul Richardson and Deputy CFO Chris Sweetland, who sit on Chime's Board, had previously agreed to the JMI acquisition and share placing, but WPP CEO Sir Martin Sorrell opposed the plan to raise money from shareholders, saying it will dilute WPP's own stake in Chime.

Sorrell stated that he would only agree to JMI's acquisition if WPP was given the go-ahead to increase its stake in Chime from 20% to 29.9%, but this was vetoed by Chime's Board.

In a statement issued to the London Stock Exchange, WPP said: 'Our principal concern is about the quality of the JMI deal, going to shareowners yet again to finance it, and a failure to focus on organic growth as promised. WPP has now stated that if Chime proceeds with the acquisition on its current terms, it is WPP's current intention to explore a sale of its stake in Chime.'

Web sites: www.wpp.com and www.chimeplc.com .

All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas, 2024- by Nick Thomas, unless otherwise stated.

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