Only six weeks after he was ousted as CEO of WPP, Sir Martin Sorrell has unveiled plans to launch a new advertising group with a view to rival his old business.
In a stock exchange announcement on Tuesday, listed cash shell Derriston Capital will be acquired by S4 Capital in a reverse takeover to build a “next generation” marketing services group. Sir Martin, who set-up S4 last month, will become executive chairman of the business.
Sky Bet chairman Paul Roy and banker Rupert Faure Walker have been named as non-executive directors on completion of the deal.
S4 Capital – named after four generations of Sir Martin’s family – is a newly incorporated company which has recently raised £51 million, of which Sir Martin Sorrell contributed £40 million and the balance of the funds coming from institutional and other investors.
The business said it will build a multi-national communication services business, initially led through acquisitions – spelling good news for independent vendors.
“S4 Capital is a company that aims to build a multi-national communication services business focused on growth,” Sir Martin said.
“There are significant opportunities for development in technology, data and content. I look forward to making this happen.”
Sir Martin, who ran WPP for 33 years, resigned as CEO in April following an investigation into personal misconduct.
Roberto Quarta, chairman of WPP, has taken on the role as executive chairman until the appointment of a new chief executive officer, although he faces a shareholder revolt over the decision to not release details of the investigation into Sir Martin’s shock departure.
Meanwhile, Mark Read, chief executive officer of Wunderman and WPP Digital, and Andrew Scott, WPP corporate development director and chief operating officer, Europe, have been appointed as joint chief operating officers of WPP.
Read is currently tipped as one of the top internal candidates for the chief executive position, alongside Oath boss Tim Armstrong and Unilever’s CMO Keith Weed.
Commenting on today’s news, Keith Hunt, managing partner and Results International, said: “We all suspected Sir Martin Sorrell would be back sooner rather than later. However, it’s still exciting to see his return within a matter of weeks.
“Sorrell’s name still clearly carries weight, as evidenced by the $150m already promised by investors for the M&A pot. With 75% control of Derriston he has the capacity to mold the business as he sees fit – and the new name suggests this is a highly personal venture.”
At WPP, Sorrell was weighed down by the heritage of a highly traditional marcoms business, Hunt said, with S4 Capital he has a “clean sheet” and an opportunity to create something “truly different”.
The arrival of S4 Capital brings yet another new player to a marketing services M&A landscape that is becoming increasingly competitive.
“Sir Martin’s stated intention to acquire businesses in technology, data and content can only be good news for independent vendors in these sectors,” added Hunt.
