Porta Communications Plc Proposed acquisition of Threadneedle Communications Limited

Porta Communications plc ("Porta" or the "Company") announces that a contract (the "Contract") has been signed in relation to the proposed acquisition of 80 per cent. of the issued share capital of Threadneedle Communications Limited ("Threadneedle" or "Threadneedle Communications") by Porta, subject inter alia to approval from the shareholders of Porta.

Proposed terms of the Acquisition

Under the terms of the Contract, the Company has conditionally agreed with the shareholders of Threadneedle ("Vendors") to acquire 80 per cent. of the issued share capital of Threadneedle from the Vendors for a total consideration of £3.8 million (subject to adjustments) payable as to a mix of cash and new ordinary shares in the capital of the Company; and completion of the acquisition will be conditional on the conditions of the acquisition agreement being satisfied, including shareholder approval.

Background to the proposed acquisition

In 2010 the directors of Porta set out a clear strategy to create an international communications and marketing business. The acquisition of Threadneedle represents the first transaction for the Company as it seeks to build a group with a wide range of services and skill sets that provide clear synergies for its client base.

The Acquisition will give Porta a leading position in the financial public relations sector focussed on small and mid cap companies while at the same time providing recurring revenues and reliable cash flows. Porta intends to build upon the quality of Threadneedle (to be renamed "Newgate Threadneedle") and the strength of its management team to create a dominant brand in this market.

It is anticipated that Threadneedle Communications, its employees and clients will in turn benefit from the increased scale and resources offered by being part of an enlarged group.

Threadneedle Communications

Threadneedle Communications is an award winning financial public relations company formed in 2003 which offers a full range of communications services.    

Threadneedle has grown in difficult markets to become the 3^rd largest financial PR adviser by number of AIM companies with over 70 clients in its stable. In the well-regarded industry specialist Hemscott rankings, Threadneedle is rated as the leading adviser to AIM companies in both the technology and industrials sectors and ranked 2^nd in natural resources. Threadneedle was recently voted Financial PR Company of the Year 2011 at the Growth Company Awards. This has particular merit as the votes came from the Chairmen, CEOs and Finance Directors of publicly listed companies.

Threadneedle was established by Graham Herring, after he left one of the world's leading PR firms, to address the needs of small and mid cap listed companies which were receiving neither the attention nor service they warranted. Graham put together a team of former small cap stockbrokers, financial journalists and leading financial PR agency practitioners - a mix which contributed significantly to the company's growth. In July 2010, Threadneedle acquired ICIS PR, a financial PR company specialising in technology companies, adding to the quality of both clients and staff. In August 2010, to augment its offering, Threadneedle set up a retail investment division, based in Edinburgh, which introduces its clients to private client brokers in London, Edinburgh and all major UK regions.

Shareholder Approval, Admission to AIM, General Meeting and Share Trading Suspension

Under the AIM Rules for Companies ("AIM Rules"), given its size, the acquisition of Threadneedle Communications Limited will be treated as a reverse takeover transaction. Accordingly, the Company will prepare an admission document ("Admission Document"), as is required under the AIM Rules in the event of a reverse takeover, and the acquisition will need to be approved by shareholders in a general meeting. 

The existing ordinary shares of the Company will be suspended from trading on AIM from 7.30am today. Trading in the existing ordinary shares will commence when the Company has finalised and published its Admission Document.

Following the publication of the Company's Admission Document, it is proposed that an application will be made to the London Stock Exchange for the Enlarged Share Capital to be admitted to trading on AIM.

The Admission Document, when published, will be posted to shareholders and the document will contain a notice convening a general meeting of the Company for the purpose of asking the Company's shareholders to approve the Acquisition and related resolutions. Subject to shareholder approval, Admission of the Enlarged Share Capital on AIM is expected to take place following the general meeting.

Commenting on the proposed acquisition, Porta Communications' CEO, David Wright said:

"Having set out our strategy for creating an international marketing and communications business in November last year, we have been focused on finding the right targets to deliver this and drive the company forward. I am therefore delighted to be able to announce the acquisition of Threadneedle, a highly respected financial PR agency which has grown through reputation at an impressive rate, despite the general market weakness experienced over the last few years.

"This is merely the first step in our stated strategy but underlines the calibre of businesses that we continue to target as we build the Porta stable."

Graham Herring, Managing Director of Threadneedle Communications, commented:

"Threadneedle prides itself on the levels of service and sound advice that have enabled us to achieve such a strong position in the small to mid cap arena in a short space of time. Our clients and their needs remain at the forefront of everything that we do and I believe that, as Porta continues along its stated strategy, there will be further benefits that can add even greater value to their communications and marketing needs."