Shares in Chime were up 6.9% to 16p. However the price is still less than half what it was before collapsing in November when they dropped 74.29% to just 9p, after Chime issued a trading statement predicting trading in the second half of its financial year was to be much worse.
Chime yesterday agreed to sell 49% of HHCL to WPP with Sir Martin Sorrell's group having an option to buy the remaining 51% of the agency if a rival gains control of Chime. WPP paid £3.5m in cash for the stake and a further £500,000 is due if HHCL hits revenues of more than £8m for the year.
The deal sees the one-time darling of the British advertising industry become the London operation of WPP's nascent fourth international network Red Cell. The agency will be renamed HHCL/Red Cell and will give the network the creative capability in London that it has lacked. HHCL has suffered a string of high profile account loses including Tango and internet bank Egg over recent times.
The sale came after four months of talks between Chime and WPP and the final price is considerably lower than the £5m Lord Bell was thought to have been asking for in September and he was replaced by Chris Satterthwaite.
HHCL founder Rupert Howell told MediaGuardian that the deal had his blessing. He said: "It gives HHCL a chance to reboot itself, while Red Cell has been looking for a credible London business for some time."
Howell, who was most recently chief executive of Chime, has given no details of his new consultancy venture, which he has said he plans to launch in the Spring. Howell quit after the sale of HHCL was first revealed in September last year.
Lord Bell, chairman of Chime, said: "This deal fulfils the strategy for HHCL that we set out at the beginning of 2002. We believe that Chime will benefit by making HHCL part of the Red Cell worldwide network. Red Cell is WPP's fourth network and will be positioned as the first global hot shop."
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