Bell and Gummer in talks over pounds 100m PR merger

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Sir Tim Bell and Lord Gummer, two of John Major's closest advisers, are believed to have held renewed talks that may lead to a pounds 100m merger of their two quoted PR companies.

PR circles have been alive with talk of a possible deal over the last two weeks, which they say would benefit both Sir Tim's Chime Communications and Lord Gummer's much larger Shandwick International.

Last month, Shandwick's London operation was hit by the defection of four key directors. Chime's Lowe Bell would bolster its financial PR side.

Shandwick, which has 90 offices around the world, would also bring Chime useful international clout, while bolstering Lowe Bell's political consultancy after the election.

"By buying Chime, Gummer would enlarge and enhance the business. Both face political problems after the election if Labour wins," a source said.

This weekend Lord Gummer was not available to comment, while Sir Tim said he "did not comment on market rumours".

Sources close to Sir Tim denied talks were taking place, though one Shandwick director confirmed that the talk was rife around the firm.

If consummated, a deal will have been six years in the making: Sir Tim was about to sell the then privately owned Chime Comm to the then plain Peter Gummer at the end of 1991, before a collapse in Shandwick's shares scuppered the takeover.

Instead, he floated the business in 1994 and it is now worth pounds 23m. Shandwick meanwhile has recovered from a late 1980s acquisition spree, which left it saddled with debt, and now commands a value of pounds 75m.

The PR sector has been alive with corporate activity this year, following a recovery in revenues. Last month Citigate, one of the biggest City PR firms, floated on the market, while rival Ludgate was snapped up two weeks ago by the US advertising giant McCann Erickson.

The recovery in agency fortunes will be underlined tomorrow when Martin Sorrell, chief executive of WPP - which owns J Walter Thompson and Ogilvy & Mather - stands to collect a pounds 3.2m share bonus. The windfall is the latest tranche of an incentive package linked to a rise in the WPP share price that will earn him over pounds 25m in the next four years.