Bell Pottinger Middle East arm bought by London-headquartered PR firm Hanover

 
Oliver Gill
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Bell Pottinger collapsed into administration on 12 September (Source: Getty)

Bell Pottinger's Middle East arm has been bought by PR rival Hanover, it was announced this lunchtime.

The sale was negotiated by Bell Pottinger group administrator BDO after the PR giant collapsed in September.

Hanover founder and chief executive Charles Lewington said: "Bell Pottinger Middle East is a terrific business with a talented, professionally run team which presents a strategic opportunity for Hanover to supercharge its growth in the region."

The acquisition will add 14 consultants to Hanover’s Europe, Middle East and Africa team of 125 and take its 2018 fee income to over £20m.

Bell Pottinger staff will remain in their posts following the deal, before being rebranded under the wider Hanover Communications brand.

Read more: Demise of a PR giant: The inside story of Bell Pottinger's collapse

A spokesman for BDO said: ‘We are delighted to have found a new home for a strong team, while also continuing to return value to Bell Pottinger’s creditors.’

Hanover was advised by SI Partners on the deal. Partner Joe Hine said buying Bell Pottinger's arm was a "really exciting deal" for Hanover.

"[The deal] creates scale and presence in the Middle East for Hanover in both Dubai and Abu Dhabi. The deal provides an excellent platform for growth for the combined business.”

Bell Pottinger fell into administration a week after a report by Herbert Smith Freehills into the firm’s controversial work in South Africa for Oakbay Capital raised serious questions over working practices.

The report found a campaign it orchestrated was “potentially racially divisive and/or potentially offensive and was created in breach of relevant ethical principles”.

The findings, together with being kicked out of the Public Relations and Communications Association (PRCA), led to high-profile clients abandoning them.

Bell Pottinger Middle East formally separated itself from its parent company prior to BDO taking control. The move was similar to that of its Asian sister firm which renamed itself as Klareco Communications.

Behind the deal – with SI Partners’ Joe Hines

Which other firms advised?

We had legal support from Osborne Clarke in the UK and Al Tamimi in the Middle East. BDO was supported by lawyers from Stephenson Harwood.

How long did the deal take?

It was very quick. There was an auction process with sealed best and final bids. After that, we only had about a week to agree on a final position and few more days to agree on a letter of intent. There was a lot of work in the background to make sure the team were aligned with Hanover and their vision.

Where did the talks take place?

It was all done either over the phone, either one-to-one or conference calls.

So there must have been a few late nights?

In terms of the commercial negotiation? Well, no late nights but several calls over weekends and whilst on holidays. But the legal negotiations were a different matter. The timeframe was so tight they worked very hard and did a fantastic job to get it done within the deadline.

How was it negotiating with an administrators BDO and an insolvent party?

It was very different. Typically talented businesses of this size have a management team who are the shareholders of the business. So you are discussing everything with one party, for example, culture, price, deal structure, future strategy and long-term commitments.

An insolvency practitioner is the de facto sole shareholder, running the process with a clear mandate to focus on creating as much value today – this complicates things.

However, it’s not totally in their control because the business they are selling only has value if the management team buy into the deal. So you are juggling a lot of balls to connect two parties who have differing objectives. This was the real strength of the proposal the Hanover team created.

Did the different teams manage to get any time for extra-curricular activities?

Unfortunately, time was tight. So there was not any time to for the team to go axe-throwing or create ice sculptures.

How about the party once the deal was signed?

We will have to let you know when we’ve had it!

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