Deal struck in the wake of the Gupta scandal adds 14 consultants to Hanover’s EMEA business
UK’s Hanover Comms snaps up Middle East unit of disgraced Bell Pottinger
A subsidiary of UK-based Hanover Group snapped up the Middle East offshoot of disgraced communications agency Bell Pottinger for an undisclosed sum, cementing the entity’s detachment from a PR scandal in South Africa that brought down its parent.
As part of the agreement, Hanover Middle East acquired the shares of Bell Pottinger Middle East in Dubai and its operating licence in Abu Dhabi. The acquisition adds 14 consultants to Hanover’s EMEA team of 125, three of which are based in the Dubai office that launched in March. Hanover’s 2018 global fee income will rise to over GBP20 million (US$26.5 million), the company said in a statement.
Hanover Middle East managing director Jonty Summers becomes managing director of the combined business, while former Bell Pottinger Middle East managing director Archie Berens becomes chairman. They will be supported by director Amy Piek.
The deal follows Bell Pottinger Middle East’s decision to separate from its former owner, UK-based Bell Pottinger Private Limited, which went into administration in September after being accused of inciting racial discord.
The Public Relations and Communications Association (PRCA) expelled the firm in August over a campaign it ran on behalf of Oakbay Capital, a company owned by the wealthy Gupta family which is accused of wielding undue influence in the South African government.
The campaign included the phrase “white monopoly capital”, prompting strong criticism from South Africa’s main opposition party, the Democratic Alliance (DA), which accused Bell Pottinger of a “hateful and divisive campaign”. The PRCA concluded the campaign was “likely to inflame racial discord”.
In statements after the expulsion, Bell Pottinger Middle East said its regional business was “robust” and that it was in talks to separate from its owner. The company has insisted it had no involvement with the Gupta account.
The sale to Hanover was negotiated by BDO, administrators for Bell Pottinger Private, following discussions with “several interested parties”, Mr Berens told The National in a joint interview with his new colleague, Mr Summers.
The purchase was made in cash. Hanover Middle East has no debt and there are no redundancies as a result of the acquisition, Mr Summers said. He refused to be drawn on growth rates for 2018, but said Hanover’s global business saw 16 per cent year-on-year growth between 2015 and 2016.
The company's clients include Facebook, Tata Steel in the UK and Lucozade, as well as several fast-growing healthcare sector entities, in which Bell Pottinger Middle East had no presence. Mr Berens said the deal had “compelling market logic”.
“I am delighted we have found a professional partner for our first-class team, whom I would like to thank for their loyalty and dedication during the uncertainty of the last two months,” he said.
Hanover has “the requisite compliance procedures to more or less eradicate the risk of anything like [the Gupta scandal] happening,” Mr Berens said. Mr Summers added the company has an ethics and compliance committee that vets work before it is taken on. “[The deal] is a great fit for both parties and we’re all thrilled,” he said.
Hanover Group has offices in London, Brussels, Dubai and Dublin and a separate sports creative agency, The Playbook. There are no immediate plans to set up other offices in the Gulf following Monday’s deal, or hire additional staff “unless the need arises”, according to Mr Summers.
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.”