S4 Capital published a prospectus setting out its strategy for growth and a circular detailing the acquisition of S4Capital and convening a general meeting on 27 September, 2018 when it will begin trading on the London stock market.
The almost 200 page prospectus offers an in-depth overview of the companyâ€™s plans, the opportunities it sees and the potential pitfalls identified since its launch after Sir Martin Sorrellâ€™s departure from WPP. The front cover of the prospectus features an image of a Burning Man sculpture to signify regeneration and says the groupâ€™s ambition is: "To create a new era, new media solution, embracing data, content and technology, in an always-on environment for multi-national, regional and local clients and for millennial-driven digital brands." The prospectus says that bypassing traditional ad agencies and taking on management consultants are two key areas of focus.
On May 30, Derriston Capital announced the conditional acquisition of S4Capital Limited, a newly incorporated company which had recently completed a Â£51 million equity fund raise, of which Sorrell contributed Â£40 million with the balance of the funds coming from institutional and other investors. The deal meant a change in the company's corporate strategy into building a multi-national communication services business and a proposed name change to S4Capital plc.
S4 Capitalâ€™s prospectus confirmed it acquired Dutch content firm MediaMonks for $348 million (â‚¬300m or Â£266m) in July. MediaMonks operates through 11 offices in 10 countries spanning the United States, the United Kingdom, Continental Europe, Asia, Latin America and the Middle East. The combined group, with over 750 people, has clients including adidas, Amazon, GE, Google, Hyundai, JAB, Johnson & Johnson, Netflix, 3G and Weber. MediaMonks services include digital experiences, product, content and ecommerce. The merger represents the first deal by S4Capital to create a new era, new media solution embracing data, content and technology.
In a statement released by Sir Martin Sorrell, Executive Chairman of S4 Capital, on the future renaming of Derriston Capital plc to S4 Capital plc, and the publication of the prospectus ahead of relisting, it stated -
Yesterday's publication of the prospectus ahead of relisting marks an important third step in three months for S4 Capital, having recently agreed the acquisition of Derriston and its merger with MediaMonks.
S4 Capital intends to provide global, multi-national, regional, local clients and influencer-driven millennial brands with new age/new era digital marketing services concentrated in three key areas initially - further development of a global digital content platform; first-party data fuelling both digital media planning and creative ideas too; and, finally, digital media buying. Listening to clients of all kinds, it seems apparent they want these services delivered faster, better and cheaper, by more agile and responsive organisations, either co-located with them or alone. To this end, S4 Capital will be organised primarily on a unitary basis, with key people continuing to be incentivised through significant, equity ownership in the enterprise as a whole. S4 Capital believes that this strategy and structure will deliver significant long-term value for share owners, particularly through organic growth, supported by strategically-focused acquisitions.
S4 Capital through MediaMonks already currently works with some of the worldâ€™s most prestigious brands, such as adidas, Corona, Google, Johnson & Johnson, Netflix and Shell through eleven offices in ten countries in the United States, Latin America, the Middle East and Asia Pacific. We are now looking to expand the digital content platform into new high potential growth territories, such as Germany, India and Japan and broaden and deepen the platform itself. We are also exploring new areas of operation in line with our strategic objectives, in data analytics and digital media planning and buying.
The $1 trillion advertising and marketing services industry is changing rapidly. Clients have had to deal with modest GDP growth, little inflation and hence limited pricing power and pressure to reduce costs for the last ten years, since the Lehman crisis. At the same time, digital transformation has disrupted innovation, manufacturing, distribution and marketing. The communications services industry, itself, has faced potential disruption from new media companies, predominantly Google, Facebook, Amazon, Alibaba and TenCent, from the consulting companies, from in-housing and from start-up millennial driven brands. Whilst this is a very challenging environment in many respects, the industryâ€™s scale and continued growth, particularly in the digital, media and data areas offer tremendous opportunity to well-funded, agile and entrepreneurial disrupters.
Welcome back to the future.
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