Shandwick talks included discussion of full offer

Lord Chadlington, the chairman and founder of Shandwick International, the world's largest independent public relations firm, disclosed that the group has held preliminary discussions with major business partners about a range of strategic options ranging from joint ventures to to a full offer for the company. Clifford German reports.

Yesterday Shandwick spokesmen refused to elaborate during the company's close period prior to the publication of full-year results later this month.

They refused to confirm reports that the potential partners included True North, an acquisitive US-based advertising agency best known for its subsidiary Foote Cone and Belding. True North has a 4.5 per cent stake in Shandwick acquired through the acquisition of Golin Harris in 1987. Shandwick shares rose 3.5p to 52p.

Shandwick's profits recovered sharply to pounds 9.2m in the last financial year but were only marginally higher at the interim stage at pounds 3.9m.

Shandwick's biggest single shareholder is the UK Active Value Fund, led by Julian Treger and Brian Myerson, who are reported to have intervened to put pressure on Lord Chadlington, the younger brother of Selwyn Gummer, the former Tory Agriculture minister, to find ways of delivering better value for shareholders. He is supposed to have promised to deliver value within six months from last autumn.

Shandwick is a global business and more than half of the revenue now comes from the US compared with less than 25 per cent in the UK. It suffered problems through its push for growth through overseas acquisitions in the 1980s and ran up debts of pounds 70m which have now been run down to around pounds 40m, finance director Roger Selman said yesterday.

The company has been nicknamed the civil service of the public relations industry because of its size, complex organisation and high staffing levels. It also lacks a major advertising business, which usually offers a more reliable source of earnings than public relations, a volatile and competitive business where accounts frequently follow account directors to rival firms.

A number of US advertising agencies are also known to be anxious to make acquisitions in the UK public relations industry in the drive to complete a global coverage across the full range of media services.

Last year the Shandwick financial public relations division suffered a loss of several senior executives, and a further small exodus took place last month. There were reports a year ago of talks between Shandwick and Lowe Bell, Sir Tim Bell's public relations and advertising group, although these were denied.

The report of discussions coincided yesterday with the announcement of a major reorganisation of the group's operations worldwide, which will merge five separate Shandwick brands into a single brand, with the aim of making it easier for clients to access the most relevant area of expertise. Operations will be reorganised into 10 specialist groups, including brand communications, broadcast consultancy, business and technology, design, healthcare, interactive, internal communications, financial, public affairs and leisure.