Sorrell plots comeback with new company after WPP exit

new york — Martin Sorrell is staging a comeback just six weeks after he was ousted from WPP, using the same formula as in the 1980s when he transformed a little-known shell company into the world’s biggest advertising group.

One of Britain’s best known businessmen, Sorrell said he would invest £40 million ($53 million) of his own money into Derriston Capital while institutional investors have pledged £150 million to buy marketing companies. The Londonlisted group will be renamed S4 Capital, in reference to four generations of Sorrell’s family, while he will become executive chairman.

Its next moves are likely to be closely watched in an industry facing questions over whether the ad guru’s model is still the best way to deliver adverts, marketing, research data and media buying in a digital world.

WPP and its peers have struggled in recent years as major consumer goods groups such as Unilever trimmed spending on marketing

There are significant opportunities for development in technology, data and content

and took some services in house, while consultancies such as Accenture have stepped up competition and Facebook and Google dominate the online ad market.

“S4 Capital is a company that aims to build a multi-national communication services business focused on growth,” the 73-year-old said. “There are significant opportunities

Martin Sorrell, British businessman

for development in technology, data and content.”

The new company, which has raised £51 million through Sorrell and institutional investors, including Lombard Odier, Miton, a Rothschild investment unit, Schroders and Toscafund, is in early talks over a number of potential acquisitions.

The group is looking to buy assets in the faster growing part of the industry such as technology and data which can be used to maximise the effectiveness of advertising, while markets such as India could also be of interest.

Tried and tested

Taking charge of a listed shell company repeats the tactic Sorrell used in the 1980s when he took a stake in Wire and Plastics Products, a maker of shopping baskets, and used it as a vehicle to buy some of the most famous advertising agencies such as JWT and Ogilvy & Mather.

Derriston Capital is a littleknown two-year-old listed shell company set up to invest in medical technology.

Over 30 years, Sorrell built WPP into a company with 200,000 staff in 112 countries by adding market research groups, media buyers and public relations firms such as Finsbury. Worth £16 billion, WPP returned millions to shareholders and dominated the industry for decades. According to Thomson Reuters data, Sorrell is still the eighth biggest investor in WPP, with a 1.4 per cent stake. — Reuters