S4 Capital : advertising & marketing assignments

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S4 Capital is the new marketing umbrella launched by Sir Martin Sorrell in 2018 following his shock resignation from WPP in April 2018. Unburdened by any no-compete restrictions, Sorrell was quick to plunge himself back into the fray. In the space of less than three months, he acquired control of publicly quoted shell company Derriston Capital, rebranded it as S4 Capital and completed his first acquisition: creative production network MediaMonks, apparently from under the nose of WPP itself. Unlike the WPP model, Sorrell is planning to develop his new group as a single integrated entity rather than a collection of separate companies. MediaMonks was not so much acquired by S4 Capital as merged into the umbrella group, with its principals joining the S4 board as directors. That company had revenues of approx €110m in 2018 and operates through 11 offices in 10 countries. Though it does develop some traditional advertising, it's best-known as a developer of digital content including VR and AR apps, and digital-enhanced experiences. It provides a solid platform for what Sorrell envisions will be a group offering "new era new media solutions embracing data, content and technology". A second deal was confirmed in Dec 2018: programmatic media platform developer MightyHive, snapped up for $150m.

Capsule checked 3rd December 2018

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Recent stories from Adbrands Weekly Update:

Adbrands Daily Update 5th Dec 2018: Sir Martin Sorrell's S4 Capital umbrella has finalised its second acquisition: San Francisco-based programmatic media developer MightyHive. Like MediaMonks, the new purchase will be merged into the parent company, with its principals becoming directors of the combined group alongside their peers at MediaMonks and Sorrell's central team. Purchase price was $150m, just a little more than S4 paid for MediaMonks. When he established S4 in the summer, Sorrell famously referred to his new venture as "a peanut" compared to WPP. This week he added: "the peanut has now morphed into a coconut, and is growing and ripening."

Adbrands Weekly Update 12th July 2018: Sir Martin Sorrell's S4 Capital completed the acquisition of creative production network MediaMonks, shrugging off a legal threat from WPP and a rival bid from Accenture. Sorrell originally opened talks with MediaMonks late last year while he was CEO of WPP. The latter has complained that he is, as a result, now in breach of the terms of his exit from the group. He was, claims WPP, "privy to extensive WPP confidential information which he was only able to acquire through his role at WPP". As a result, WPP wants to strip him of his remaining £20m in share awards. No deal price was disclosed, but MediaMonks had been seeking offers in excess of €300m, a little under three times annual revenues, and 15 times earnings. According to the official announcement, "The merger represents the first move by S4 Capital to create a new era, new media solution embracing data, content and technology, which meets client needs in an always-on environment.... Subsequent emphasis will be placed on further platform development, data analytics and digital media buying, run on a single P&L basis, as clients are increasingly demanding." One additional benefit of the deal is that Sorrell gets a new business card and a new job title: Senior Monk at Media Monks. So much more exciting than £20m in share rewards.

Adbrands Weekly Update 5th July 2018: It didn't take long for the truce between Sir Martin Sorrell and WPP to fall apart. Both now appear to be involved in a tug of war over a potential acquisition. At the beginning of the week, Sorrell was reported to have targeted Netherlands-based MediaMonks as the first acquisition for his new S4 Capital vehicle. The company is a creative-led digital production agency with a network of 11 offices in Europe, the US, Latin America and Asia. The expected price tag will be €265m - €300m. Within a day or two, though, it transpired that WPP was also bidding for the business (and so too may be Accenture). It quickly got fractious. Several sources report this morning that WPP has threatened to strip Sorrell of his £20m of remaining share awards if he proceeds with his bid, since it could conceivably put him in breach of his exit agreement. A source "close to Sir Martin" told the BBC "If WPP is going to start some sort of procedural process, Sir Martin will fight it. But this guy is worth £400m to £500m. He is not going to allow £20m to stand in the way what he is trying to do." None of the interested parties has gone on the record on the rumours.

Adbrands Weekly Update 31st May 2018: Sir Martin Sorrell is back in business, just six weeks after his abrupt departure from WPP. Sky News was first to break the news that he has arranged to acquire publicly quoted shell company Derriston Capital, nominally a specialist in medical technology, through a reverse takeover by his own investment company S4 Capital. That move would be almost identical to the process whereby he acquired Wire & Plastic Products, a maker of shopping baskets, in 1986 and made it the vehicle for a hostile takeover of J Walter Thompson the following year. Sorrell has received commitments for around $150m of institutional funding for his new venture and is expected to end up with around 30% of the final company, and the title of executive chairman. The two other newly appointed co-directors are Sorrell's long-time advisor Rupert Faure Walker - who has worked with him since the JWT deal - and investment manager Paul Roy, currently chairman of Sky Bet. The new group intends to "build a multinational communication services business, initially by acquisitions". Expect fireworks.

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