Sorrell: WPP Should Be Broken Up, As S4’s Latest Acquisition Target Revealed
Sir Martin Sorrell has used a TV interview on Friday to say the only reason he keeps his remaining WPP shares is because he believes they’ll be worth more when the behemoth media company gets broken-up and sold.
Speaking to CNBC News, Sorrell said the only valuable part of WPP was the GroupM business which he believed was worth as much as the rest of WPP combined.
Sorrell is currently WPP’s largest single share holder with about a 1.4 per cent stake valued at £171 million ($A312 million).
According to Sorrell, GroupM is “probably worth about $US15 billion”, on a level with the market value of the entire group.
Sorrell said that WPP had “to change violently” to be more viable, although he was vague on exactly how that should occur.
“Now, there is some debt there, so the enterprise value is higher,” Sorrell said, “but the answer to your question is the break-up values of these companies, or the market values, are approaching levels which we haven’t seen for some time.”
Sorrell described WPP as a “legacy” business and he was keen to distance his new company, S4, from it by deliberately playing in the merging digital and production space.
“You know, we have a clean sheet of paper at S4, our top line is growing 40 per cent, 45 per cent, accelerating into the second half of the year,” Sorrell said.
“You look at the statistics around the US ad market – IPG came out with statistics for the first half – market’s up six per cent, digital up 20 per cent, traditional is down three per cent. So managing the transformation and the change is key.”
In other S4 news, UK media is reporting that Sorrell is set to unveil a £100 million ($A180 million) share sale to fund his next wave of takeovers.
This, Sky News is reporting, would make S4 worth a staggering £1 billion ($A1.8 billion) in just over 18 months of operation.
According to Sky, Sorrell’s next acquisition will be the US firm Firewood, the biggest marketing agency in the Silicon Valley employing over 300 people. It will be integrated into S4’s MediaMonks division to broaden its offering in areas such as paid search, display and video campaigns.
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