Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
S4 Capital, the struggling marketing group led by advertising mogul Sir Martin Sorrell, has received an offer from ad agency MSQ Partners over a “possible combination” between the companies.
The discussions, which S4 Capital confirmed on Monday were in a “very preliminary stage”, would see the group that Sorrell founded following his exit from WPP acquire the marketing company, which is part owned by US private equity group One Equity Partners.
The combination, if agreed, would be structured as an acquisition by S4 of MSQ, Sorrell’s group said on Monday.
“These discussions are at a very preliminary stage and there can be no certainty that a transaction will be forthcoming,” S4 said in a statement, issued after Sky News reported on Saturday that the company had received “a number” of approaches.
Sorrell founded S4 after quitting WPP following an internal investigation into his conduct. Investors were initially enthused by his plans for a digital-led, tech-focused and heavily acquisitive UK marketing group. S4’s market value surpassed £5bn in 2021.
However, S4 has since issued several profit warnings, in part due to a pullback in client spending as they invest more heavily in artificial intelligence. Higher interest rates have also weighed on the group, whose shares have plummeted more than 97 per cent since their peak in September 2021.
The potential tie-up with MSQ, which employs about 1,900 staff and services clients including Booking.com, Unilever and Lego, comes after S4 booked a loss of £306.9mn in its 2024 full-year results in March.
At the time, S4 said this was a result of a £280mn writedown resulting from tough trading conditions.
Jamie MacEwan, senior media analyst at Enders Analysis, said S4’s interest in a deal looked like a tacit acknowledgment that its focus on tech clients “had flopped”.
The deal could be an “attractive expansion” to S4’s portfolio of activities and shows it’s “willing to take on expertise in serving a wide range of clients,” he added.
S4’s tech clients accounted for about half of its £848mn revenues last year.
#Sorrells #Capital #takeover #talks #agency #MSQ #Partners
