Chime Communications, the communications and sports marketing group, has acquired People Marketing UK Limited, a sports marketing and communications agency based in Shanghai and WARL Group Limited, a London based specialist ‘shopper marketing’ agency.
Chime has acquired 100% of the share capital of PMUK (which includes its wholly-owned subsidiary People Marketing Sport and Entertainment Hong Kong Limited) from its founder Ms Irene Cheung.
Prior to the acquisition by Chime, Ms Irene Cheung transferred to PMUK all those business activities related to sports management carried on directly by her in Mainland China, Hong Kong and the Far East region. PMHK is also in the process of forming a wholly foreign owned enterprise which will carry on business in Mainland China and which is expected to benefit from certain new contracts.
Ms Irene Cheung will join the Executive Board of CSM Sport and Entertainment which is chaired by Lord Coe.
For the year to 31 December 2012 those business activities which have been transferred to PMUK generated revenue of HK$54 million (£4.5 million) and profit of HK$16.3 million (£ 1.4 million). PMUK has no gross assets.
Initial consideration for the acquisition is HK$128 million (£10.8 million). Of this sum 20% has been paid in cash with the remaining 80% being paid once the WFOE is established and trading. HK$89.6 million (£7.5 million) of this will be paid in cash and the remaining HK$12.8 million (£1.1 million) will be financed through the issue of new Chime ordinary shares to Ms Irene Cheung.
The acquisition is expected to be broadly earnings neutral but will significantly enhance the geographical spread of CSM Sport and Entertainment’s activities and provide access to the Chinese and South East Asia markets.
Further deferred consideration may become payable over the period to 2017 depending on the performance of PMUK. Such deferred consideration is capped at HK$97 million (£8.2 million).
Chime has agreed to acquire WARL from its three shareholders, Marcus Wilcox, Kerry Bateman and Brian Lloyd.
WARL brings specialist retail and shopper skills to the VCCP Partnership.
WARL was founded in 1998. It has developed a unique ‘shopper marketing’ model utilising shopper insight to drive greater sales conversion. WARL has a significant blue-chip client base including Diageo, Tesco’s F&F brand, United Biscuits, McArthurGlen and, more recently, Coca Cola and Samsung.
Initial consideration is £4.5 million of which 30% will be funded by the issue of 521,062 new Chime ordinary shares. Further deferred consideration may become payable over the period to 2018 depending on the performance of the business. This is capped at £8 million of which at Chime’s option, 40% may be satisfied through the issue of new Chime ordinary shares.
For the year to December 2012 WARL generated revenue of £4.3 million and an operating profit of £1.1 million. As at 31st December 2012 WARL’s gross assets were £2.5 million.
The acquisition is expected to be immediately earnings enhancing and provides VCCP with a strong position in ‘shopper marketing’ which is of increasing importance to their existing and future clients.
Application will be made for the 521,062 new ordinary shares being issued as part of the initial consideration for WARL to be listed on the Official List of the Financial Services Authority and to be admitted to trading by the London Stock Exchange on its main market for listed securities. It is expected that dealings in the new ordinary shares will commence on 22nd May 2013. The new ordinary shares will rank pari passu with Chime’s existing issued shares.
The issued share capital of Chime is currently 85,148,297 ordinary shares, each with voting rights. Therefore following admission of the new ordinary shares the issued share capital of Chime on 22nd May 2013 will be 85,669,359 ordinary shares each with voting rights.
Christopher Satterthwaite, Chief Executive of Chime Communications, said, “We are delighted with these two acquisitions which are in line with our stated strategy. We know Irene Cheung well and China is a key market opportunity for CSM Sports and Entertainment. WARL, with its focus on data analysis and return on investment gives VCCP a strong opportunity with its client base, be they FMCG or Retail”.
UK, London and Shanghai
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