S4 Capital, the agency group led by executive chairman Martin Sorrell, has confirmed MSQ Partners, the owner of The Gate, approached it about a "possible combination".
S4 Capital said in a statement to the stock market: "These discussions are at a very preliminary stage and there can be no certainty that a transaction will be forthcoming."
The statement followed Sky News reporting on Saturday (August 9) that S4 Capital had received a number of takeover approaches, including from One Equity Partners.
S4 Capital said that if the deal goes through, it would be structured as an acquisition of MSQ by S4, which is listed on the London Stock Exchange.
Shares in S4 Capital rose 3.8% to 22p by 16:37 on August 11.
MSQ and One Equity Partners failed to respond to a request for comment before publication.
The deal would also bring together S4's Monks, previously known as MediaMonks, with MSQ's agency brands, including The Gate, Walk-In Media and strategy and innovation consultancy The Forge, which MSQ bought in May.
One Equity Partners became the leading shareholder in MSQ in 2023, replacing UK private equity company LDC. At the time, it said it was lining up several acquisitions.
MSQ was created in 2011 in a management buyout of the business previously known as Media Square.
The company said trading reflected “volatile macroeconomic conditions” and clients remained “generally cautious”.
It added that net revenue and operational Ebitda [earnings before interest, taxes, depreciation, and amortisation] in 2025 would be “broadly similar to 2024”.
S4 Capital launched in 2018 after Sorrell left his role as chief executive of WPP. After doing a €300 million (£259 million) deal for MediaMonks, it launched on the stock market as a reverse takeover of Derriston plc, opening at a price of 151p.
