WPP has paid Chime 拢3.5m in cash for its 49% stake. A further 拢500,000 in cash is payable provided HHCL achieves revenues of more than 拢8m for the year.
The deal will see WPP's Red Cell merged into HHCL & Partners, which will be renamed HHCL/Red Cell. This is in line with other acquisitions made by WPP as part of its strategy to build the Red Cell network as its fourth international network alongside Ogilvy & Mather, Young & Rubicam and J Walter Thompson. Last year WPP bought the New York independent Berlin Cameron & Partners as well as Paris creative shop Les Ouvriers du Paradis. Both added Red Cell to their names.
Talks between WPP and Chime first began in September 2002, but were thought to have stalled over price, which was originally mooted to be as much as 拢5m. Chime needs the cash to clear its debts.
The sale sees Nick Kerr, managing director of Red Cell London, leave the agency. It had been previously agreed that Nick Howarth, managing director of HHCL & Partners, would replace the current Red Cell group chairman Simon Burridge leaving no place for Kerr. However, a cull of jobs at Red Cell is unlikely as it has already undergone a slimming down process, leaving it with just 20 staff.
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."
The company says that HHCL's involvement in Red Cell will make it more competitive with other agencies.
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