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Abu Dhabi, UAEMonday 23 July 2018

Martin Sorrell makes his first deal after WPP exit

The former WPP head beat his former employer to acquire the Dutch digital agency MediaMonks Multimedia Holding

Martin Sorrell quit as the head of WPP in April. His first deal since departure may put him on collision course with the old employer. AFP
Martin Sorrell quit as the head of WPP in April. His first deal since departure may put him on collision course with the old employer. AFP

Martin Sorrell’s new venture acquired Dutch digital agency MediaMonks Multimedia Holding, 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 on Tuesday that did not include other terms. Bloomberg first reported that the deal could come as soon as Tuesday, with Sorrell outbidding WPP and rival suitors to pay about 300 million euros ($352m).

The purchase is part of an effort by Mr Sorrell, 73, to rebuild his franchise after his abrupt ouster as chief executive officer of the world’s biggest advertising group in April.

“Outside of WPP, Sorrell has something to prove,” said Colin Morrison, a media and digital marketing consultant. “He’s bought a really good company that a lot of people wanted, and there was a hell of a queue lining up in this auction.”

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The confrontation between Mr Sorrell and WPP over the Dutch agency may not be over. WPP last week had warned Mr Sorrell that going after MediaMonks would represent a violation of his confidentiality agreement with his former employer, putting at risk stock awards worth about £20m ($26m).

MediaMonks, with revenue of about 110m euros, employs more than 750 people and counts Adidas, Amazon.com, Alphabet’s Google and Johnson & Johnson among clients, according to the statement.

“With this merger, I’m privileged to be shaping the future of the creative industry alongside a man with an unprecedented reputation for building successful businesses,” MediaMonks chief executive Victor Knaap said in a separate emailed statement.

Mr Sorrell, in the statement, said the next move will be to build out the MediaMonks platform further, to add “meaningful data analytics and digital media buying.” He said: “This represents a significant step in building a new age, new era, digital agency platform for clients.”

S4 has a reverse takeover agreed with Derriston Capital, a listed shell company, through which Mr Sorrell plans to raise £1 billion pounds 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, Mr Sorrell has said he is 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.

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