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Sorrell has a strained relationship with Penn, the founder of Stagwell, that goes back to their previous work relationship. That tension is complicating any potential deal between S4 and Penn’s company, people familiar with the matter said. Penn worked for Sorrell for years after WPP bought a research and polling consulting firm that Penn co-founded. He left in 2012 to work for Microsoft.
Stagwell, whose clients include Bud Light and the National Football League, owns agencies such as Code and Theory, 72andSunny and Anomaly, as well as public-relations agency SKDK and research firm The Harris Poll. Penn has long had a keen interest in acquiring S4 because of its expertise in areas such as app development, data marketing and helping companies with their digital transformations.
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However, Stagwell’s interest in S4 is waning given Sorrell’s reluctance to negotiate, some of the people said.
New York private-equity firm New Mountain Capital held exploratory talks with S4 last year about a possible acquisition, according to people familiar with the discussions. New Mountain has a majority stake in digital marketing outfit Tinuiti and owns Bounteous, a consulting company focused on building digital customer experiences for brands. New Mountain remains interested in buying some parts of S4.
New Mountain Capital declined to comment.
The stock decline has left Sorrell vulnerable, said Greg Paull, co-founder of R3, a consulting firm that helps match advertisers with agencies. “I wouldn’t be surprised if someone like private equity comes in and takes a shot at it,” he said.
A sale would mark an ironic twist for Sorrell because he “is usually the one leading the way in the acquisition space,” Paull said.
Asked about his M&A strategy during a 2011 interview, Sorrell said: “In my view, there is no such thing as a hostile takeover. Many takeovers are not hostile to the shareholders or employees—they may be hostile to the CEO.”
Sorrell rebuffed the offers because they undervalued the company and he didn’t view Stagwell as a good strategic fit with his firm. One proposal, made last fall, was worth nearly $700 million, some of the people said. At least one private-equity firm also expressed some interest in acquiring S4.
Https://www.wsj.com/business/media/he-was-the-ad-industrys-hunter-now-hes-the-prey-65a12b99