Incepta in merger talks with rival Huntsworth

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The Independent Online

The owner of Citigate Dewe Rogerson, the financial PR agency, revealed yesterday it had bounced back from an abortive attempt to merge with Chime Communications and straight into takeover talks with another rival.

The owner of Citigate Dewe Rogerson, the financial PR agency, revealed yesterday it had bounced back from an abortive attempt to merge with Chime Communications and straight into takeover talks with another rival.

Incepta said it was in "advanced" discussions with Huntsworth, which owns the City PR company GCG Hudson Sandler, over a possible all-share merger. A deal would create a company with a combined market valuation of more than £200m.

Analysts said both groups needed to seek scale in a sector that has been rapidly consolidating amid a bleak few years for the media industry.

Incepta, chaired by the former Tory minister Francis Maude, has been attempting to pull off a transforming deal for some time, most recently with Lord Bell's Chime group, home to the Bell Pottinger City PR agency. Its talks with Chime collapsed in November after the two sides failed to thrash out acceptable terms. Incepta said: "The terms of any such merger would be based on recent share price averages."

Shares in Incepta, which is roughly twice the size of Huntsworth, fell 1.5p to 61.5p on the news, while Huntsworth's stock edged 0.5p higher to 22.5p. One media analyst said: "Both companies are sub-scale and they want to get bigger. There are relatively few opportunities for increasing size."

Analysts said Huntsworth's business had been gaining momentum during the past two years, in which its stock market capitalisation has tripled in value. "Incepta and Chime have had their day. They are still dealing with the legacy of their binges [during the dot.com era] when they Hoovered up everything in sight only to spend the next three years suffering from indigestion. Huntsworth has been quite aggressive on the acquisition front recently and has far more momentum than Incepta," one analyst said.

Since June 2001, Huntsworth, which is chaired by Lord Chadlington, the founder of the Shandwick PR company, has bought 19 companies. Its acquisition of Trimedia Group in April, for up to £17m, helped to expand its reach across Germany and France, while its purchase of Havas's 60 per cent stake in Hudson Sandler gave it a toehold in City PR.

Both companies will be looking to slash high fixed costs by combining their global operations, analysts said. Incepta has operations across Europe and in the US. It warned last month that its events and specialist advertising business had struggled, sending its shares tumbling. It has reported a pre-tax loss for the past two years. Huntsworth owns a string of specialised public relations agencies, including Counsel and EHPR.

Incepta warned yesterday: "Although these discussions are at an advanced stage, there can be no certainty that they will lead to a transaction."

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