WPP clashes with Sorrell venture in €300m Dutch auction

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WPP clashes with Sorrell venture in €300m Dutch auction sir martin sorrell wpp sky news 4323978

WPP Group has become embroiled in a bidding war with the new venture set up by Sir Martin Sorrell, less than three months after he quit the FTSE-100 company that he built into the world’s biggest marketing services group.

Sky News has learnt that WPP tabled an offer ahead of a deadline last Friday for MediaMonks, a Dutch-based digital creative agency whose clients include Audi and Lego.

The auction, which is being overseen by Clarity Corporate Finance, a London-based advisory firm, has also drawn interest from Accenture and Inflexion, a private equity firm, according to industry source.

It is, however, the rival bids from WPP and S4 Capital, Sir Martin’s new holding company, that will generate frenzied interest both in the City and the marketing services industry.

:: Investors give WPP bloody nose over Sorrell payout

S4’s involvement in the €300m (£265m) auction was reported on Monday night by the Financial Times, but WPP’s simultaneous participation in the process has not previously been disclosed.

News of their competing offers for MediaMonks comes less than a fortnight after Sir Martin told an audience at the Cannes Lions advertising festival that S4 would not be in direct competition with his former employer.

“I’ve referred to it being a peanut,” he said.

“Although it does occur to me that some people have peanut allergies.”

The involvement of both companies in an auction for the same asset is, however, like to raise fresh questions about both Sir Martin’s remarks and the absence of a non-compete clause in his final WPP contract.

He has, nevertheless, given confidentiality undertakings which could impact on S4.

A spokesman for S4 declined to comment on the MediaMonks auction on Tuesday, while Clarity did not respond to enquiries about the deal.

A spokeswoman for the Dutch agency said only that it was “flattered to be mentioned in this context and it’s a testament to the work MediaMonks’ team is doing”.

Market speculation has also linked S4 Capital to other targets including MDC Partners, a US-listed agency group.

Sir Martin left WPP following an investigation into allegations relating to the use of company funds to pay for a sex worker – which he has vociferously denied.

His ability to establish a business in direct rivalry with WPP, the owner of J Walter Thompson, Ogilvy and Young & Rubicam, while retaining up to £19m in unvested share options led to a limited shareholder protest against the chairman, Roberto Quarta, at last month’s annual general meeting.

Sir Martin remains a significant shareholder in WPP, with much of his wealth tied up in the stock of the company he took from a manufacturer of shopping baskets in 1985 to bestriding the global advertising industry.

By the time he stepped down in April, WPP was valued by the stock market at more than £16bn.

Its shares have slipped in recent months, however, amid investor anxiety about the impact of marketing budget cuts and shifts at major global advertisers.

Ford has put its global creative business – held by WPP agencies – under review, while an executive at Unilever, WPP’s second-largest client, said it would watch S4 Capital’s progress with interest.

S4 Capital has been created from a reverse takeover of Derriston Capital, a listed cash shell, that Sir Martin plans to use it as a vehicle to build a “next-generation” marketing services group.

His progress is being closely watched by the world’s biggest marketing services agencies, which are being forced to adapt to a fast-changing media landscape in which Facebook and Google have emerged as powerful challengers to traditional advertising media.

Sir Martin has committed £40m of his own money to the new venture, with institutional investors such as Lombard Odier, Miton, Schroders and Toscafund all backing the vehicle

Dowgate Capital, a stockbroker, has been working with Sir Martin on fundraising activity by S4, which is structured so that it is controlled by its executive chairman with an iron grip.

Roberto Quarta, the chairman, has named two long-serving WPP executives as joint chief operating officers while a permanent successor to Sir Martin is being recruited.

It has not made any big strategic moves since Sir Martin’s exit, although it has agreed to sell equity holdings in two technology businesses.

WPP declined to comment.



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