CHBi, one of Britain’s first and biggest new media agencies, is to be bought outright by one of the US’ best known new media agencies, Razorfish, on June 1.
CHBi, which has built its annual turnover to 2m since launch three years ago and now employs 28 staff, will operate under the banner CHBi Razorfish.
Razorfish is minority-owned by Communicade, a division of Omnicom, which owns advertising networks DDB and BBDO. Financial terms of the takeover are undisclosed. But leading shareholders and directors of the company Mark Curtis and Mike Beeston, who along with fellow director and minority shareholder Ian Perring established the company as a “front living room” business in 1995, will maintain their key management positions at the agency under service contracts linked to the sale.
Razorfish’s president and chief executive officer Jeffrey Dachis will become chairman of the London business.
Beeston played down the impact high-profile business failures in the sector, such as the financial collapse of fellow leading UK agency Webmedia in February, have had on the search for an acceptable suitor.
According to Beeston: “Every year has been profitable. We are up 80 per cent year-on-year in revenue terms. From every point of view, we are working and we are successful. We will be working at full capacity for the next five to six months. There is no doubt about the financial stability on which this [deal] is based.”
The deal, which sees CHBi integrated into a transatlantic agency network employing 140, is the latest in a series by Razorfish. It has recently bought into a number of thriving and struggling new media businesses.
The agency this month completed the absorption of financially troubled New York agency Avalanche Solutions, three months after a takeover deal was announced.
Despite the financial health of CHBi which, according to Curtis, has been financed through cashflow since its inception, a significant injection of capital was necessary to reinforce its growth plans in the UK and other markets.
“We have had little or no interest from UK companies,” says Curtis. “It’s disappointing that there is not more [UK] venture capital available for investment in this booming market.”
The search turned instead to the US, where CHBi was invoved in talks with a number of venture capital, traditional ad agency, and new media agency groups.
The deal with Razorfish is the result of CHBi “waiting to find the perfect match and not jumping into bed with just anyone”, according to Beeston who becomes managing director of CHBi Razorfish.
The combined agency will inherit a strong client base, including CHBi’s existing clients RAC, Virgin, Goldfish and Allied Domecq. Razorfish, meanwhile, handles a variety of production and marketing-related accounts for America Online, Time Warner, Wall Street Journal, IBM and AT&T.
The London office does not expect to “leverage” any significant new business from existing Razorfish clients as a result of the takeover, says Curtis. “Rather, we expect to be able to expand our business here by being able to learn together and swop ideas.”