Sir Martin Sorrell, the long-serving chief executive of the world’s largest advertising group until he stood down amid personal misconduct allegations last month, is to become executive chairman of a financial holding company.
He will lead Derriston Capital and use it as a vehicle to build a “next-generation” advertising group, according to a statement due to be released by the firm on Wednesday morning and seen by the Guardian.
The deal, agreed provisionally, will involve the acquisition by Derriston of S4 Capital. The latter entity has been established by Sorrell. Its name reportedly refers to four generations of his family.
Sorrell, one of the UK’s best-known businessmen, is most closely associated with his time at WPP Group, a firm he built up from obscurity to a £16bn valuation during his 33-year tenure.
His actions are reminiscent of his early days there, people close to the deal have said. “He’s borrowing from the same playbook,” Sky News quoted one of his backers as saying.
When he left WPP six weeks ago, he told staff that the firm’s future was “more important than a matter of life or death”.
He said: “As I look ahead, I see that the current disruption we are experiencing is simply putting too much unnecessary pressure on the business. That is why I have decided that in your interest, in the interest of our clients, in the interest of all share owners, both big and small, and in the interest of all our other stakeholders, it is best for me to step aside.
“As a founder, I can say that WPP is not just a matter of life or death. It was, is and will be more important than that. Good fortune and godspeed to all of you … now back to the future.”
He had been the longest-serving FTSE-100 executive. His £70m remuneration in 2015 was among the biggest in UK corporate history. But his reign at WPP ended after the group hired a law firm to investigate allegations of improper use of company funds and improper personal behaviour. The 73-year-old said he unreservedly denied the claims.
News of the Derriston deal was first reported by Sky News, citing unnamed sources.
Sorrell has committed about £40m of his own money to the venture, with more than £10m in additional funding coming from other investors, including Lombard Odier, Miton, Lord Rothschild’s RIT Capital Partners, Schroders and Toscafund.
The new company has received indications that investors would “be willing to provide over £150 million of further equity funding to support ... acquisition plans”, Derriston’s announcement said.Sky reported that WPP had said it was not permitted to reveal additional information about the investigation into Sorrell’s behaviour because of data protection laws and the legal agreement it had reached with him.
