NEWS18 October 2006
NEWS18 October 2006
Board says ‘no' to group looking to acquire the bulk of its marketing communications and marketing services businessesMedia Square has rejected a bid from a private equity group looking to acquire the bulk of its marketing communications and marketing services businesses – including MR agency Illuminas.
Promethean – a Media Square shareholder – is believed to have offered upwards of £45m for the businesses according to Reuters, quoting an unnamed source close to the deal.
In a statement, Media Square said: “Due to the significant scale of the offer, the group held a meeting of all directors to fully discuss its merits.
“Subsequently, the board unanimously concluded that the offer, although substantial, materially undervalued the group as a whole and was not in the best interests of its shareholders.”
Media Square did not name the bidder, referring only to “a third party”. Promethean did not return a call to comment.
Chief executive, Jeremy Middleton described the approach as “opportunistic”. Media Square's share price had been in decline since 29 September after the group warned underlying operating profits for the first half of the year would be “significantly below management's expectations”.
However, shares were back trading this morning at their pre-profit warning closing price, 17.75 pence.
Middleton said Media Square had incurred some short-term costs while restructuring and integrating the 16-company Marketing Services Group ( MSG ), which it bought from PR group Huntsworth in a £63m deal last November.
He told Research: “Some of the businesses are taking a little time to get to grips with, but there is no business in the group that we don't really enjoy working with.”
Middleton said shareholders had been “supportive” of the board's decision to reject the acquisition offer.
“We are committed to our strategy of building one of the largest marketing services and marketing communications groups in the UK,” he said. “I don't see a private equity buyer as someone who would add anything to our strategy. The right trade buyer might.”
Author: Brian Tarran