Bigmouthmedia to merge with web marketing rival LBI

Private equity investors Carlyle, Cyrte and Janivo will pump 40 million (35m) into the enlarged firm, which is expected to raise a further 10m through a rights issue to LBI investors in July.

LBI's shareholders will hold 51 per cent of shares in the merged entity, which will trade as LBI, while Bigmouthmedia's owners will hold 25 per cent and the private equity investors will control the rest.

LBI said the cash injection would allow the firm to expand its work in the United States, Asia, the Middle East and North Africa.

Steve Leach, executive chairman of Bigmouthmedia, told The Scotsman that he would continue in a "non-executive, advisory capacity" with the new group after seeing it through the merger but would then take a back seat before considering his next project.

Leach – who founded Bigmouthmedia from a basement in Edinburgh in 1997 before merging it with German outfit Global Media in 2006 – said he was investing more of his own money into the new business.

Following the merger, LBI is expected to have annual sales of more than 160m and will employ about 1,800 people.

Leach said he does not expect redundancies to be made at the two agencies and that the Bigmouthmedia brand will continue to be used in the short term.

"I'll be taking a wee break and then starting all over again, although not competing with LBI," Leach added. "Since stepping down as chief executive, I've been inundated with job offers and opportunities but I'm not making any decisions yet.

"I've no plans to sell any of my shares. I'm investing more money into the company. It was never the objective to use this as a windfall for me."