Lord Bell is facing a fight to get approval for his £19.6m management buyout of the controversial PR firm Bell Pottinger after top shareholder Sir Martin Sorrell criticised the financial terms as "strange".
Bell Pottinger's parent company, Chime Communications, said yesterday it had agreed the sale to Bell's new company, BPP Communications Limited. But Chime must win the approval of at least 50 per cent of shareholders in a vote on 18 June.
Lord Bell wants to buy back the PR business, which has been struggling in recent months.
The agency hit the headlines at the end of last year after The Independent revealed that its staff had talked about their use of "the dark arts" in political lobbying.
The £19.6m price is eight times the firm's 2011 profits. BPP will pay almost £15m in cash, while Chime will retain a 25 per cent stake. Chime's chief executive Chris Satterthwaite said: "I think shareholders will be supportive."
But Sir Martin, whose company WPP holds a 20 per cent stake in Chime, said the valuation should take into account turnover of £29m as well as profits.
"Chime itself is valued at or above revenues," Sir Martin said. "It seems strange to sell a significant operation at two-thirds of revenues. Why keep 25 per cent unless it's to make the transaction easier for management? It sets a terrible precedent. There are other, better ways of incentivising management, if that's what's needed."
Mr Satterthwaite said: "We're keeping 25 per cent because we share some clients and we think it's a solution for the time being. We value companies on profits."
He claimed it was in Chime's interest to sell Bell Pottinger, and said: "It's an under-performing business. First, it lost its large, American government contract and we've closed down all the geopolitical work it used to do.
"Second, the whole lobbying issue has attracted some reputational issues and that hasn't helped. But I don't think that has been the driver of it."
Mr Satterthwaite said that he wants Chime to be "a more focused communications and sports marking group", but the company will also keep PR arm Good Relations.