PR firm Porta in merger talks as profits plunge
London PR and marketing agency Porta Communications confirmed it is in merger talks with Italian PR and marketing firm SEC.
Porta said it has “entered into discussions concerning a potential all-share merger” of the two companies, which may or may not lead to the potential merger occurring.
“The Potential Merger would create a strategic communications company of scale with offices in key markets across the UK, Europe, the Middle East, APAC and South America.”
It said the benefits of a merger could include:
- Complementary geographic networks with very limited crossover
- The scale and capacity to extend the international network to strategic markets such as the US and additional markets in Asia
- The roll-out of proprietary new market research and communications product offerings across the enlarged group's footprint
- Synergies and reduced head office costs relating to a combined listed entity
- A strengthened Balance Sheet for the combined group
- An expanded shareholder base.
The company’s board said it believes that the combination of Porta and SEC has the potential to be attractive to all shareholders.
For these reasons, the Independent Directors of Porta have resolved to proceed with discussions with SEC and both parties are preparing to undertake mutual and reciprocal due diligence, as is customary for a share transaction of this nature, with a view to the Independent Directors and the board of SEC agreeing the terms of the potential merger.
The company said the terms and conditions of the potential merger, if agreed, will be set out in a further announcement.
Falling profits and widening losses
Any takeover is conditional upon shareholder agreement, however, Porta published its latest set of full year results today, which may convince shareholders to approve any deal.
The company reported a fall in revenue to £35.9m compared with £40.3m for the same time last year. Losses grew to £4.1m versus £3m last time around and debt rose to £10m compared with £8.4m last year.
In its full year results statement, Chairman John Foley said the group had arranged £1m in funding from SEC and a backstop £0.5m facility if shareholders fail to agree the merger.
“With the funding secured to support the group's working capital needs, we now have the opportunity to examine a potential merger with our strategic investor, SEC, on which we will keep shareholders updated.
“We are pleased with the positive position the Group is now in and excited about the opportunities we believe we now have. We look forward to the future with renewed energy and confidence."
Porta’s brands include financial comms agency, Newgate Communications, digital agency, Publicasity, Engagecomms and 2112.
Porta’s shares have fallen 74 per cent over the last year to just under a penny each.