Sorrell refuses to fade into the woodwork
AD INDUSTRY SUPREMO’S PURSUIT OF WPP ACQUISITION TARGET, MEDIAMONKS, IS A SUBTLE DIG AT FORMER EMPLOYER
Sir Martin Sorrell reigned as one of the most influential leaders in the advertising industry for three decades as CEO of WPP. After he abruptly resigned in April, the normally sharp-tongued 73-year-old slipped unexpectedly out of sight. But not for long | B4
Sir Martin Sorrell reigned as one of the most influential leaders in the advertising industry for three decades as the chief executive of the marketing colossus WPP. After he abruptly resigned in April after an investigation into alleged personal misconduct, the normally sharp-tongued, frenetic 73-year-old slipped unexpectedly out of sight.
But not for long. By the end of May, Sorrell had created a new advertising company called S4 Capital, which he pitched last month at the annual advertising bacchanal in Cannes. While there, he spoke at events where he defended his reputation and criticised WPP for how it had handled his departure.
Then last week, Sorrell clashed more directly with his former employer, with both vying to purchase the same Dutch marketing firm.
Lawyers for WPP sent a letter to Sorrell telling him that he was risking his future stock awards, worth millions of dollars, by aiming to buy the Dutch firm, according to a person who reviewed the letter.
The letter said that WPP started considering an acquisition of the firm, called MediaMonks Multimedia Holding BV, in November 2017.
Sorrell, who was then still running the conglomerate, “was heavily engaged in this process,” it said.
That would make his separate pursuit an “unlawful diversion of a maturing business opportunity from WPP,” and would most likely breach his confidentiality agreement, which would threaten the stock awards, the letter said.
Revenge or strategy?
A spokesman for Sorrell said the claims were inaccurate and represented “a weak and feeble attempt by WPP to destabilise” S4 Capital’s bid for MediaMonks. The scuffle has put a spotlight on Sorrell’s ambitions after WPP, which he founded in the 1980s, and his efforts to push past his unceremonious exit.
“Bidding on the same thing as WPP, is that a coincidence — of all the things in the world?” said Jon Bond, co-chairman of the digital marketing firm Shipyard.
“It feels like more of an emotional reaction than a thoughtout calculated approach because he’s on the rebound. My question is what’s the strategy, and be careful, because revenge is not a strategy.”
Yesterday, it was reported that Sorrell’s new venture had acquired MediaMonks, beating WPP in the auction and setting up a possible clash with the advertising powerhouse. Sorrell’s S4 Capital Ltd is paying the owners of Amsterdambased MediaMonks in shares of his investment company as well as cash.
Sorrell has referred to his new firm as a “peanut” compared to WPP, which owns more than 100 marketing and communications firms, including Ogilvy and Y&R.
He acknowledged his age while speaking at an event in Cannes, saying that he is looking at building the firm for the next five to seven years, at which point he will reassess his physical and mental health.
Existing firm’s listing
S4 Capital plans to be publicly traded by using an existing company’s listing.
According to a May filing, it aims to “build a multinational communication services business, initially by acquisitions,” with a focus on technology, data and content.
Sorrell, who was one of the world’s most highly paid executives while at WPP, contributed £40 million (about $53 million; Dh195.2 million) of the firm’s initial equity funding and is its executive chairman.
The filing noted that institutional investors had indicated they would be willing to provide more than $200 million in additional equity funding for acquisitions.
“I think WPP expected him to be perhaps toxic and therefore not able to raise capital,” said Brian Wieser, a media analyst at Pivotal Research.
“They maybe underestimated the degree to which he now has a massive chip on his shoulder and really wants to be able to prove himself.”
It remains to be seen how Sorrell’s exit from WPP affects his new business ventures.
In recent weeks, Sorrell has denied a report in The Wall Street Journal that his departure was preceded by a company investigation into whether he had visited a brothel and used WPP money to pay a prostitute.
About MediaMonks
MediaMonks, a digital production company founded in 2001, has 11 offices globally and about 750 employees that it refers to as “monks”. It has worked with companies like Lego, Google, Bose and Ikea on creative projects from gaming apps to documentaries.
“I still think he will be very successful in attracting agencies,” Greg Paull, a principal at R3, a consulting firm, said of Sorrell.
“He’s built so much goodwill in the business, there will be enough entrepreneurs wanting to work with him in a more hands-on structure.”
WPP had not publicly made an issue of Sorrell’s plans until the MediaMonks pursuit.
Lawyers for WPP wrote that Sorrell was privy to “extensive” confidential information about MediaMonks, which “he was only able to acquire through his role at WPP”.
WPP’s chairman, Robert Quarta, told The Journal last week that if Sorrell had violated his confidentiality agreements with the firm, which cover acquisitions that it explored while he was chief executive, it could threaten his long-term share award of as much as $26 million.
Bond was sceptical about whether that would serve as much of a deterrent.
“I don’t think he cares that much about that,” he said.
“He’s in his 70s and made enough money that it’s not going to matter. I think that’s probably not as important to him as winning.”