Sir Martin Sorrell has announced a freeze on takeovers for his company, S4, following several warnings and red flags on the profits and sustainability of the brand.
According to British publication This Is Money, a lack of results in the early stages of this year have forced Sorrell to pause any future mergers and acquisitions after acquiring over thirty companies in just four years.
This could mean a delay of up to 18 months on current deals as S4 attempts to stabilise its plummeting stock and integrate its existing acquisitions in a bid to satisfy investors.
In late July, S4 announced a hiring freeze as the share price tanked 44 per cent. While in May, the company was embarrassed after auditing problems delayed its annual results leading some to suspect there were bigger problems at play with its numbers.
These lower stock prices and profit warnings could be causing investors to lose confidence in S4, with a London source claiming that the process had “tainted” S4’s reputation.
S4’s rapid M&A program has been focused primarily on tech companies and digital media since its inception back in 2018, following Sorrell’s shock departure from WPP. It now operates out of 33 countries with an estimated staff of over 9000.
Sorrell has also made several high-profile hires in an attempt to return the company to its initial form, including non-executive director Colin Day and chief operating officer Chris Martin. Day in particular will be focusing on the firm’s audit and risk committee as S4 targets a rise in share prices.
S4’s stock price has fallen more than 80 per cent in the last twelve months, with the firm currently valued at around £1billion ($AU1.73 billion). A source that spoke to This Is Money said they couldn’t see S4 “coming back to being a £5billion ($A8.6 billion) company.”
