Chime merger talks collapse

Two public relations firms with a host of blue-chip clients today revealed that talks over a potential £197m (€281m) merger had broken down.

Chime Communications – headed by former British Prime Minister Margaret Thatcher’s former adviser Lord Bell - said it had failed to agree terms on a deal with larger rival Incepta.

Analysts said a tie-up would have made “considerable commercial sense” and constructed a client list that includes heavyweights such as BAE Systems, Imperial Tobacco and ITV.

Chime owns subsidiaries such as Bell Pottinger and Good Relations and its strengths are seen to lie in public affairs and consumer public relations.

But with a market value of £55.3m (€78.9m) and a 650-strong workforce, it is dwarfed by Incepta which is worth £141.5m (€201.9m) and employs more than 2,000 people around the world.

Incepta has a strong position in financial and corporate communications, mainly through the Citigate brand, but its margins are weaker than Chime.

According to Investec analyst Malcolm Morgan, merger talks would be “fraught with difficulties” because of the difference in size of the companies.

However, a deal would allow Chime to expand overseas while Incepta has the ability to take on more work without incurring additional costs, Mr Morgan said.

“We believe that the issue of the merger will not necessarily go away. Certainly the company comments have not slammed the door on a resumption of talks,” he added.

The companies revealed the merger talks today in response to press reports at the weekend.

It is thought that a merger would have the blessing of advertising giant WPP, which owns 20% of Chime.