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| Martin Sorrell on verge of £266m MediaMonks takeover | Martin Sorrell on verge of £266m MediaMonks takeover |
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| Sir Martin Sorrell is on the verge of a €300m (£266m) takeover that will escalate hostilities with WPP, the advertising group he founded before sensationally resigning after 30 years at the helm. | Sir Martin Sorrell is on the verge of a €300m (£266m) takeover that will escalate hostilities with WPP, the advertising group he founded before sensationally resigning after 30 years at the helm. |
| The acquisition by Sorrell of Dutch agency MediaMonks, which could be announced as soon as Tuesday, comes after WPP told its former chief executive it would withhold up to £20m in future bonus payments if he went ahead with the deal. | The acquisition by Sorrell of Dutch agency MediaMonks, which could be announced as soon as Tuesday, comes after WPP told its former chief executive it would withhold up to £20m in future bonus payments if he went ahead with the deal. |
| The takeover is the first acquisition for S4 Capital, the venture Sorrell set up almost immediately after leaving WPP, with the backing of several financiers. | The takeover is the first acquisition for S4 Capital, the venture Sorrell set up almost immediately after leaving WPP, with the backing of several financiers. |
| WPP was among several firms bidding for MediaMonks and its lawyers wrote to Sorrell last week to warn that rivalling his former employer would be “unlawful” because it breaches the terms of a confidentiality agreement. | WPP was among several firms bidding for MediaMonks and its lawyers wrote to Sorrell last week to warn that rivalling his former employer would be “unlawful” because it breaches the terms of a confidentiality agreement. |
| If the two sides end up in a legal dispute over Sorrell’s bonuses, lawyers for WPP are expected to claim that the advertising industry veteran gleaned much of his knowledge about MediaMonks while helping the company prepare its own bid. | If the two sides end up in a legal dispute over Sorrell’s bonuses, lawyers for WPP are expected to claim that the advertising industry veteran gleaned much of his knowledge about MediaMonks while helping the company prepare its own bid. |
| Sorrell is expected to contest the allegation. | Sorrell is expected to contest the allegation. |
| One industry source close to WPP said Sorrell had chosen to ignore its lawyers’ warning. “He’s obviously paying no attention to that … That’s quite a ballsy move,” the source said. | One industry source close to WPP said Sorrell had chosen to ignore its lawyers’ warning. “He’s obviously paying no attention to that … That’s quite a ballsy move,” the source said. |
| Investors backing Sorrell are understood to be aware of the legal wrangle but are continuing to support the deal. Both WPP and a spokesman for Sorrell declined to comment. | Investors backing Sorrell are understood to be aware of the legal wrangle but are continuing to support the deal. Both WPP and a spokesman for Sorrell declined to comment. |
| WPP and other companies in the bidding, understood to include the consultancy group Accenture, dropped out of the auction for MediaMonks some way below the €300m price, which is relatively high for a deal of this nature at 30 times recent underlying profits. | WPP and other companies in the bidding, understood to include the consultancy group Accenture, dropped out of the auction for MediaMonks some way below the €300m price, which is relatively high for a deal of this nature at 30 times recent underlying profits. |
| “Obviously the reason he’s decided to pay that is that he needs the first deal as a platform to do other things,” the source said. “To pay up to the extent that he has is a big stretch. Once you’ve paid [that much] what happens with your second deal? Vendors say they want something close to that. Shareholders will not thank him for setting a precedent for that sort of multiple.” | “Obviously the reason he’s decided to pay that is that he needs the first deal as a platform to do other things,” the source said. “To pay up to the extent that he has is a big stretch. Once you’ve paid [that much] what happens with your second deal? Vendors say they want something close to that. Shareholders will not thank him for setting a precedent for that sort of multiple.” |
| Sorrell’s decision to go head-to-head with WPP for acquisitions comes just weeks after he described his new venture, S4 Capital, as a “peanut” compared with the business he built into the world’s largest advertising agency over three decades. | Sorrell’s decision to go head-to-head with WPP for acquisitions comes just weeks after he described his new venture, S4 Capital, as a “peanut” compared with the business he built into the world’s largest advertising agency over three decades. |
| The WPP chairman, Roberto Quarta, who has faced criticism from shareholders over the firm’s handling of its founder’s departure, has also dismissed concerns about Sorrell competing with the company. | The WPP chairman, Roberto Quarta, who has faced criticism from shareholders over the firm’s handling of its founder’s departure, has also dismissed concerns about Sorrell competing with the company. |
| Speaking on the sidelines of WPP’s annual meeting last month, Quarta said: “We’re watching to see what Martin will do. We are entitled to challenge any individual who may breach his or her confidentiality. Martin I don’t think needs to be reminded of his responsibilities and I’m sure he’ll act appropriately.” | Speaking on the sidelines of WPP’s annual meeting last month, Quarta said: “We’re watching to see what Martin will do. We are entitled to challenge any individual who may breach his or her confidentiality. Martin I don’t think needs to be reminded of his responsibilities and I’m sure he’ll act appropriately.” |
| Sorrell resigned from WPP in April amid an investigation into his personal conduct, which has been followed by allegations of bullying and claims he visited the residence of a sex worker in London’s Mayfair. Sorrell has strenuously denied the allegations but said a non-disclosure agreement signed with WPP prevented him from commenting further. | Sorrell resigned from WPP in April amid an investigation into his personal conduct, which has been followed by allegations of bullying and claims he visited the residence of a sex worker in London’s Mayfair. Sorrell has strenuously denied the allegations but said a non-disclosure agreement signed with WPP prevented him from commenting further. |
| The advertising industry veteran set up S4 weeks after stunning the City by resigning from WPP, the company he built from a small Kent-based maker of wire baskets into the world’s biggest ad group. | The advertising industry veteran set up S4 weeks after stunning the City by resigning from WPP, the company he built from a small Kent-based maker of wire baskets into the world’s biggest ad group. |
| He has put £40m of his own cash into the new business and attracted £11m more from institutional investors, as well as a further commitment for another £150m to fuel an acquisition spree. His backers include the investment firms Schroders, Miton Group and Lombard Odier, as well as the financier Lord Rothschild. | He has put £40m of his own cash into the new business and attracted £11m more from institutional investors, as well as a further commitment for another £150m to fuel an acquisition spree. His backers include the investment firms Schroders, Miton Group and Lombard Odier, as well as the financier Lord Rothschild. |
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