As expected, Martin Sorrell is adding programmatic firm MightyHive to his S4 Capital portfolio with a deal valued at $150 million. S4 reported that talks were at an advanced stage yesterday, then confirmed terms had been reached earlier today.
It’s the second major acquisition for the company since Sorrell formed it earlier this year, after he was forced out of the CEO perch at WPP. In July, the company acquired digital production agency MediaMonks for $350 million.
"The peanut has now morphed into a coconut, and is growing and ripening," quipped Sorrell, who has earlier described S4 as “peanut” in comparison to adland’s major holding companies.
The latest purchase will enable the programmatic shop to scale more rapidly and offer clients more integrated products, including services from sister company MediaMonks.
MightyHive will become a wholly owned subsidiary of S4 Capital.
Pete Kim, MightyHive CEO-cofounder, and Christopher Martin, MightyHive COO-cofounder, will join the S4 Capital board of directors while also remaining in their roles running the day-to-day operations of MightyHive. "The company’s leadership will remain involved in the day-to-day operations of the company. Our services and approach are not changing," the company stated on its website.
There are also financial incentives for sticking around. S4 Capital is establishing an incentive scheme with an aggregate value of $5 million for MightyHive's employees. It will pay $5 million in restricted cash bonuses to MightyHive's team following completion of the merger, expected to close on December 24.
S4 Capital will fund the cash portion of the consideration through the issue of 67.2 million new ordinary shares. Daniel Pinto -- founder and CEO of Stanhope Capital, the global investment and advisory group, which is leading the new share offer -- will also join S4's board.
For his part, Sorrell is making it clear that his new company is focusing on deals that battle new competitors rather than his previous rivals, including Publicis and Omnicom.
"Following both the MightyHive merger and the recent opening of the MediaMonks office in San Francisco, S4 Capital's focus on the West Coast of the United States and the digital natives at companies like Apple, Microsoft, Google and Facebook, not forgetting the software giants Adobe, Salesforce and Oracle, will intensify," he states.
Sorrell added that S4 Capital is focusing in three key areas initially: “The development of a global digital content platform; first-party data fueling both digital media planning and creative ideas; and, finally, digital media buying. Clients of all kinds want these services delivered faster, better and cheaper, by more agile and responsive organizations, either in-house, co-located with them or alone."