Sorrell's MightyHive Merger Proceeds

Sir Martin Sorrell's new company S4 Capital plc has agreed to merge with programmatic solutions provider MightyHive, Inc., for an enterprise value of US$150m; and has announced a number of senior appointments.

Victor Knaap, Wesley ter Haar and Peter Rademaker join as directors of S4 with immediate effect, while MightyHive CEO and COO Peter Kim and Christopher Martin will do the same once the deal is completed. Daniel Pinto, founder and CEO of investment and advisory group Stanhope Capital - which is leading the capital raising - will also join the Board at that time.

S4 says the merger furthers its strategy of 'aligning award-winning digital creative content, digital media planning and buying and first-party data capabilities'. MightyHive's revenue increased at a CAGR of 129% between 2015 and 2017, with adjusted EBITDA jumping at a CAGR of 196%. The deal, which Sorrell confirmed only yesterday was in its advanced stages, includes the establishment of an incentive scheme with an aggregate value of US$5m for MightyHive staff, who will get $5m in restricted cash bonuses on completion, out of the existing cash resources of the Group. S4 will fund the cash portion of the consideration with a share issue, by way of a firm placing to raise £28.1m and a placing and open offer to raise £45.9m.

Completion of the merger is expected on Christmas Eve.

Sir Martin says of the deal: 'The merger with MightyHive marks an important second strategic step for S4 Capital. The peanut has now morphed into a coconut, and is growing and ripening. MediaMonks' award-winning digital creative production and MightyHive's market-leading programmatic offering will give S4 Capital's clients end-to-end, fully integrated and seamless capabilities in purely digital marketing. 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 continues: '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 - the development of a global digital content platform; first-party data fuelling 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 organisations, either in-house, co-located with them or alone'.

Sorrell left WPP abruptly in April, returned at the wheel of a new shell company six weeks later - this was renamed as S4 Capital - and in July he beat WPP in a race to buy Dutch creative digital production company MediaMonks.

Web sites: www.mightyhive.com and www.s4capital.com .