Sir Martin Sorrell bounces back from WPP exit with new reverse takeover

● S4 Capital raises total of £51 million as institutions weigh in with extra support

Sir 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.

Sir Martin’s return to the London stock market was confirmed yesterday, with the former WPP boss to head up a newly formed “multi-national communication services business”.

The advertising guru will pump £40 million into the shell company Derriston, which will then acquire S4 Capital, a firm established by Sir Martin and through which he will launch his comeback.

As part of the reverse takeover, Derriston will be renamed S4 Capital, in reference to four generations of Sorrell’s family, while he will become execu- tive chairman. Earlier this year Sorrell exited WPP, the company he founded over 30 years ago, following allegations of personal misconduct.

S4 has raised a total of £51 million and institutional investors have signalled they are willing to provide more than £150m of further equity funding to support acquisition plans.

The group said its new corporate strategy is to “build a multi-national communication services business, initially by acquisitions”, much the same way that WPP did.

Sorrell said: “S4 Capital is a company that aims to build a multi-national communication services business focused on growth.

“There are significant opportunities for development in technology, data and content. I look forward to making this happen.”

WPP carried out an inquiry into allegations that Sir Martin misused company funds, but the details of the investigation were never revealed.

The firm is facing the prospect of a shareholder revolt at its annual general meeting (AGM) over how it handled the departure.

S4 Capital’s next moves are likely to be closely watched in an industry facing questions over whether the advertising tycoon’s model is still the best way to deliver adverts, marketing, research data and media buying in a digital world.

Wppanditspeershavestruggled in recent years as major consumer goods groups such as Unilever trimmed spending on marketing and took some services in house, while consultancies such as Accenture have stepped up competition and Facebook and Google dominate the online ad market.

Among shareholder issues for WPP in recent years have been controversy about Sorrell’s high remuneration.