Sir Martin Sorrell's former employer, WPP, is understood to be trying to beat him to the race to acquire MediaMonks.
Earlier today the Dutch digital production firm emerged as the first takeover target for Sorrell's new S4 Capital venture, which he joined after leaving his WPP chief executive post in acrimonious fashion in April.
But now it looks as though Sorrell may face competition for the deal, with Sky News reporting that his old employer WPP and consultancy Accenture have also lodged bids for MediaMonks.
The proposed deal is reported to be valued at £265m, and is being overseen by Clarity Corporate Finance.
The news of WPP’s involvement may heighten tensions between the world's biggest marcomms group and its erstwhile chief executive, who left his position following an investigation into the misuse of company funds, which Sorrell denies.
The Drum earlier today explored why Sorrell would look to build his new proposition on the back of the 600-strong, digital savvy MediaMonks, and examined how he plans to build a new agency that avoids the WPP network pitfalls.
Sorrell has raised £100m investment for S4 Capital, on top of a £50m in debt funding, in readiness for an acquisition spree.
Tony Walford, the founder of M&A advisory Green Square, cautioned that MediaMonks may not be the wisest buy for a network like WPP due to its already substantial scale and extensive client list, which may throw up conflicts.
He said: "Given MediaMonks is a digital production agency, a big chunk of its clients are other agencies. This makes it quite difficult for an agency holding company to buy it and I’m surprised WPP are being talked about as an acquirer (unless they are purely after the talent). If an agency network buys it, then MediaMonks clients within all the other agency groups are unlikely to want to continue working with them going forward – would Omnicom agencies want to? This was the issue with finding an agnostic buyer for Tag all those years ago."
Sorrell on the other hand can snap up the agency without any risk of client conflict due to his own network only being in its formative stages, said Walford. "Some of the big groups may get a bit antsy about lining Sorrell’s pockets, but it’s not like he’s still at WPP or can steer talent away from projects for them in favour of those being delivered by his own agencies. It also gives him a chance to get close to all the network groups as they will all be S4 clients. If his view is that the traditional model is failing, then building a group that can provide services direct to clients as well as all the agencies is smart."
Neither MediaMonks nor the rumoured bidders have openly admitted their involvement in the process. However, MediaMonks branded the interest as “flattering”.