Gate buyout attempt rebuffed by Media Square

June 30, 2011 - PRLog -- A group of senior executives from The Gate Worldwide specialist advertising network owned by Media Square is understood to have been rebuffed in an attempt to mount a management buyout of their business, according to a report in the marketing industry’s financial research publication Marketing Services Financial Intelligence (www.fintellect.com).

The news of the buyout initiative follows press reports earlier this week that debt-laden Media Square was looking for a buyer or merger partner for the entire group.  Marketing Services Financial Intelligence commented that the successful outcome of any such discussions is likely to be influenced by the stability or otherwise of key profit-making units within the group. “The advertising division that comprises The Gate Worldwide was the biggest contributor in the year to February 2011”, Marketing Services Financial Intelligence editor Bob Willott said.

According to Media Square, the advertising division contributed £3.2 million of underlying profit before finance costs and various other items in the year.  The Media Square group as a whole reported a post-tax loss of £2.7 million, bringing the cumulative losses to date to £58 million. Bank borrowings before offsetting advance receipts from clients amounted to £19.5 million on 28 February.

“Having rebuffed the buyout approach, Media Square’s management may now be concerned about the possibility of a breakaway of Gate executives as this could undermine any negotiations with potential bidders for the group and possibly depress the price tag being sought”, the Marketing Services Financial Intelligence report said.

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Dedicated 24/7 online publication providing financial news, analysis and commentary on the marketing communications industry, edited by industry expert Bob Willott, an accountant and former special professor at the Nottingham University Business School