Sorrell’s new venture S4 Capital beats WPP to acquire MediaMonks

Deal sets up potential clash with advertising powerhouse

Martin Sorrell attends a conference at the Cannes Lions International Festival of Creativity. Photograph: Eric Gaillard/Reuters

Martin Sorrell attends a conference at the Cannes Lions International Festival of Creativity. Photograph: Eric Gaillard/Reuters

 

Martin Sorrell’s new venture acquired Dutch digital agency MediaMonks Multimedia Holding BV, beating his former employer WPP in the auction and setting up a possible clash with the advertising powerhouse.

Mr Sorrell’s S4 Capital is paying the owners of Amsterdam-based MediaMonks in shares of his investment company as well as cash, according to a statement Tuesday. Other terms weren’t provided.

The purchase is part of an effort by Mr Sorrell (73) to rebuild his franchise after his abrupt ouster as chief executive officer from the world’s biggest advertising group in April. WPP, the company he founded more than three decades ago, had also bid for MediaMonks.

The confrontation between the two over the Dutch agency may not be over. WPP last week had warned Sorrell that going after MediaMonks would represent a violation of his confidentiality agreement with his former employer, putting at risk his retirement package worth about £20 million pounds (€22.6 million).

Bloomberg previously reported that a purchase by Mr Sorrell’s company of MediaMonks could come as soon as Tuesday. Mr Sorrell had outbid WPP and rival suitors for the acquisition, at a price of about €300 million, Bloomberg reported.

MediaMonks, with revenue of about €110 million, employs more than 750 people and counts Adidas, Amazon. com, Alphabet’s Google and Johnson and Johnson among clients, according to the statement. The company plans to focus on platform development, data analytics and digital media buying going forward.

Mr Sorrell’s S4 has a plan to acquire Derriston Capital, a listed shell company, and raise £1 billion of equity for further deals. His new venture has attracted the backing of City of London investors including hedge fund manager Crispin Odey. Still one of WPP’s largest investors, Sorrell has said he’s not out to damage the ad group with his new venture.

However, some other WPP shareholders have criticised the board for not including a non-compete clause in Mr Sorrell’s contract to prevent him from going head-to-head with the company. WPP shares are worst-performing among major advertising companies, as investors fret about its ability to contend with big market shifts, including declining spending by consumer giants and new competition from digital rivals and consultants.

Mr Sorrell’s departure followed a stock plunge for WPP - which has lost almost a quarter of its market value over the past year - and its worst performance since the financial crisis. He resigned suddenly after an investigation into allegations of misconduct by the board became public. Mr Sorrell has denied any wrongdoing. – Bloomberg