WPP Share News (WPP)

Marketing firm Chime Communications is to sell its public relations arm, Bell Pottinger, to its own Chairman and deputy Chairman.The deal will cost Chairman Lord (Tim) Bell and Deputy Chairman Piers Pottinger £19.6m and see them resign from the board of Chime. Of the £19.6m, £13.9m is payable in cash on completion, a further £1m will be paid once the two sides have agreed on the exact figures on the balance sheet, while a further £4.1m will be paid in shares (in other words, giving Chime a 25% stake in the stand alone business).Bell Pottinger contributed profit before interest and tax of £2.4 million to Chime last year, or 8% of its headline profits. The total £19.6m cost is around eight times Bell Pottinger's profits before interest and tax. The directors of Chime describe this as an "attractive multiple".One person who may disagree is Sir Martin Sorrell, the Chief Executive of marketing goliath WPP, which owns a 20% stake in Chime. Speaking to the Guardian he has said "if it's a good deal for Tim (Bell), it is a bad deal for Chime".In an interview in April when the management buyout was being mooted he added: "I still don't understand the logic of selling off Bell Pottinger unless they are running up the white flag."This is a public relations and public affairs business, it is not a bad business and it is not in a bad industry. The point is you don't sell them unless they are dead-end businesses, which this is not."Chime will now focus on its sports marketing and advertising services. At 10:46am the stock had risen 5.2%.BS