S4 Capital Confirms Preliminary Talks with MSQ Partners

S4 Capital has confirmed it is in preliminary merger talks with MSQ Partners, which has described the potential deal as a “possible combination”.

MSQ, which owns agencies including The Gate, SPCSHP and Walk-In Media, is majority-owned by US private equity firm One Equity Partners. S4, the parent company of Monks, said the approach came from MSQ and that the talks are at a very early stage, with no certainty of a transaction.

"These discussions are at a very preliminary stage and there can be no certainty that a transaction will be forthcoming,” S4 Capital said in a statement to the stock market following reporting by Sky News that the company had received “a number” of approaches.

If the deal goes through, S4 Capital said it would be structured as an acquisition of MSQ by S4, which is listed on the London Stock Exchange.

The announcement was made “without the prior agreement or approval of MSQ,” noted S4.

​Sir Martin founded S4 in 2018, following an exit from WPP. After its listing that year, the company’s share price rose 20.5% to 137p, reflecting early investor optimism in its plan to build a heavily tech-focused and digitally led operation underpinned by an aggressive M&A strategy.

Over time, the tech focus has underperformed expectations with S4’s shares shrinking more than 97% since their peak in September 2021.

S4 isn’t alone in feeling the financial struggles as market forces – diminishing marketing budgets, high inflation, and a turn to investment in AI – is affecting other ad giants.

If completed, the deal with MSQ, which employs about 1,900 staff and services more than 250 clients across healthcare, consumer goods, financial services, and B2B including Unilever, Haleon, Lego, P&G and Booking.com, would meaningfully expand S4’s capabilities and market presence beyond the tech sector, which accounted for about half of S4’s £848 million revenues last year, according to the Financial Times.