Providence, WPP offer $576.8 mln for Chime Communications

Providence Equity Partners and WPP have agreed to acquire Chime Communications plc for approximately £374 million (US$576.8 mln) in cash. WPP already owns 20.03 percent in Chime and reportedLy plans to keep it stake at that amount, making Providence the majority owner. London-based Chime is a communication and sports marketing group.

PRESS RELEASE

31 July 2015
RECOMMENDED CASH OFFER
for
Chime Communications plc (“Chime”) by
Bell Bidder Limited (“Bidco”)
to be effected by means of a Scheme of Arrangement
under Part 26 of the Companies Act 2006
Summary
· The boards of Bidco and Chime are pleased to announce that they have reached agreement on the terms of a recommended cash offer pursuant to which Bidco will acquire the entire issued and to be issued ordinary share capital of Chime (the “Offer”).
· Providence and WPP are joint offerors for the purposes of the Code.
· Bidco is a newly-incorporated entity indirectly controlled, as at the date of this Announcement, by funds managed by Providence. As described below, WPP will acquire an indirect minority interest in Bidco on or around the Effective Date in exchange for transferring its Chime Shares to Bidco’s parent company.
· Under the terms of the Offer, Chime Shareholders (other than WPP) will be entitled to receive 365 pence in cash (the “Offer Price”) for each Chime Share held. In addition, Chime Shareholders who are on the Chime shareholder register on 11 September 2015 will be entitled to receive an interim dividend for the current year of 2.53 pence per Chime Share.
· Taking into account the Interim Dividend, the Offer values the entire issued and to be issued share capital of Chime at approximately £374 million.
· The Offer represents:
· a premium of approximately 33 per cent. to the Closing Price per Chime Share of 275 pence on 29 July 2015 (being the last Business Day prior to the commencement of the Offer Period);
· a premium of approximately 37 per cent. to the average Closing Price per Chime Share of 266 pence during the one month period to 29 July 2015 (being the last Business Day prior to the commencement of the Offer Period);
· an Enterprise Value representing a multiple of approximately 25.4x Chime’s Reported Operating Profit for the year ended 31 December 2014; and
· an Enterprise Value representing a multiple of approximately 14.5x Chime’s Headline Operating Profit for the year ended 31 December 2014.
· The Chime Independent Directors consist of the directors of Chime other than Christopher Sweetland, who is an employee of the WPP Group.

· The Chime Independent Directors, who have been so advised by Moelis & Company and HSBC as to the financial terms of the Offer, unanimously consider the Offer to be fair and reasonable. In providing advice to the Chime Independent Directors, Moelis & Company, which is providing independent financial advice for the purposes of Rule 3 of the Code, has taken into account the commercial assessments of the Chime Independent Directors. The Chime Independent Directors have also been so advised as to the financial terms of the Offer by HSBC. In providing advice to the Chime Independent Directors, HSBC has taken into account the commercial assessments of the Chime Independent Directors.

· Accordingly, the Chime Independent Directors recommend unanimously that Independent Shareholders vote in favour of the Scheme at the Court Meeting and that all Chime Shareholders vote in favour of the resolution to be proposed at the General Meeting, as the Chime Independent Directors have irrevocably undertaken to do in respect of their own beneficial holdings of 1,555,926 Chime Shares representing, in aggregate, approximately 1.5 per cent. of the share capital of Chime in issue on 30 July 2015 (being the latest practicable date prior to this Announcement) and approximately 1.9 per cent. of the Scheme Shares.
· The Offer is intended to be effected by means of a Court-sanctioned scheme of arrangement under Part 26 of the Companies Act (the “Scheme”).
· WPP will contribute its entire existing interest in Chime (being 20,158,421 Chime Shares, representing approximately 20.03 per cent. of the share capital of Chime in issue on 30 July 2015 (being the latest practicable date prior to this Announcement)) to Topco, in exchange for the issue and allotment of ordinary shares in the capital of Topco, pursuant to the Subscription and Reinvestment Agreement. The remaining ordinary shares in Topco will be held indirectly by funds managed by Providence.
· Providence is a premier global asset management firm with over $40 billion in assets under management across complementary private equity and credit businesses. Since the firm’s inception in 1989, Providence has invested in over 140 companies and is the leading private equity investment firm focused on the media, communications, education and information industries. Providence has made a number of investments in media related fields, including in the advertising, sports and entertainment sectors which are relevant to Chime. As an experienced media investor with a particular focus on sports related media, Providence is well positioned to assist Chime, together with WPP, in growing the business in the future.
· WPP Group is the world leader in marketing communications services. It comprises leading companies in advertising, media investment management, data investment management, public relations & public affairs, branding & identity, healthcare communications, direct, digital, promotion & relationship marketing and specialist communications.
· As WPP is a joint offeror, WPP will not be entitled to vote its Chime Shares at the Court Meeting. However, WPP will be entitled to vote at the General Meeting and Bidco has received an undertaking from WPP in the Bid Conduct Agreement to vote in favour of the resolution to be proposed at the General Meeting in respect of, in aggregate, 20,158,421 Chime Shares, representing approximately 20.03 per cent. of the share capital of Chime in issue on 30 July 2015 (being the latest practicable date prior to the date of this Announcement).
· The Offer is subject to a number of Conditions and further terms, including the approval of the Scheme by Independent Shareholders at the Court Meeting, the passing of the resolution by the Chime Shareholders at the General Meeting by the requisite majorities and customary regulatory conditions. The Conditions are set out in full at Appendix I to this document.
· The Scheme Document, containing further information about the Offer and notices of the Court Meeting and the General Meeting, will be published as soon as practicable and, in any event, within 28 days of this Announcement.
Commenting on the Offer, Lord Davies of Abersoch, Chairman of Chime, said:
“Chime has achieved great success to date in building a leading position in the global sports marketing and communications industry, which is reflected in the attractive premium being offered to shareholders. However, to fulfil Chime’s considerable growth potential, significant new capital is required. Providence and WPP offer Chime both the capital and the industry expertise to fast-track our ambitions to build a full scale, global sports marketing and communications business. Taking this into account, Chime’s independent Directors unanimously recommend that shareholders vote in favour of the resolutions at the General Meeting and in favour of the Scheme at the Court meeting.”
Commenting on the Offer, Andrew Tisdale, director of Bidco, said:
“Chime’s history is one of innovation, creativity and consistent delivery of superior results for its clients. We believe Chime’s true assets are its people, and are excited to have the opportunity to partner with them as we embark on the next phase of the company’s growth.”
This summary should be read in conjunction with the full text of this Announcement, including the Appendices. The Offer will be subject to the Conditions and further terms set out in Appendix I to this Announcement and to the full terms and conditions which will be set out in the Scheme Document. Appendix II to this Announcement contains the sources of information and bases of calculation of certain information contained in this Announcement, Appendix III contains a summary of the irrevocable undertakings received in relation to the Offer and Appendix IV contains definitions of certain expressions used in this summary and in this Announcement