Digital advertising firm S4 Capital (SFOR) jumped 6.6% to 149.3p after announcing the $150m takeover of marketing agency Firewood.
The cash and shares deal is being part funded through a £100m share issue which will also be put towards further deals.
S4 is a vehicle for WPP (WPP) founder Martin Sorrell, who left the advertising giant in acrimonious circumstances last year. He has not wasted any time, making a series of acquisitions since setting up the venture in May 2018.
Although the company has signalled plans to double in size organically by 2021, M&A is likely to continue to play an important role in the company’s growth.
BUY AND BUILD
Firewood is an international digital marketing agency which enjoys extensive partnerships with some of the world’s best-known technology brands, and is, according to S4, the largest independent agency in Silicon Valley
WPP was also a buy-and-build effort. Starting in the mid-1980s, chief executive and founder Martin Sorrell used a defunct wire shopping basket manufacturer Wire and Plastic Products (hence the name WPP) as a vehicle for acquisitions.
The first big move was the $566m takeover of New York-based agency J. Walter Thompson in 1987.
The costs of expansion may make valuing S4 tricky for investors, with the company recently booking a first-half loss thanks to acquisitions and hiring costs.
