Collision course: Chime makes sports buy in US – and runs into trouble with WPP

Chime Communications today spent up to £43.7 million on JMI, a US sports marketing firm that specialises in motor-racing. However, the deal was overshadowed by a row with top shareholder WPP, which plans to sell its stake in Chime.

The dispute involves some big names as it pits ex-Olympics supremo Lord Coe, the chairman of Chime’s sports marketing division, against WPP chief executive Sir Martin Sorrell.

WPP did not oppose the acquisition of JMI, in which WPP also had a minority stake, but Sorrell’s camp wanted to increase its 21% shareholding in Chime.

WPP asked for 29.9% and, when that offer was rebuffed, 27.5%. Chime’s board offered a compromise of 24.9% but the two sides did not agree.

It is understood the Chime camp wanted all its shareholders to have a fair chance to participate in a fund-raising for the JMI acquisition.

Chime successfully raised £25.6 million in a placing at 300p a share before today’s stock-market opening.

WPP did not participate, so its stake has fallen to 18%. It plans to “explore” a sale of its shares, worth an estimated £58 million, “subject to price”. Sorrell’s firm has had a stake in Chime since 1998.

A WPP spokesman said: "Our principal concern is about the quality of the JMI deal, going to shareowners yet again to finance it, and a failure to focus on organic growth as promised. We are also considering what we should do with our investment."

Chime shares tumbled 6p, or 1.9%, to 317.3p, although they remain close to a record high.

Chief executive Chris Satterthwaite does not think investors will worry. “They’ve seen the demand there is in the marketplace during the placing,” he said.

Satterthwaite said the acquisition of JMI — which is involved in Formula 1, Nascar and IndyCar racing — fits with Chime’s strategy of being more international as it previously had little presence in America or motorsport.

Numis Securities and HSBC carried out Chime’s placing.