Sir Martin Sorrell’s advertising firm S4 Capital has confirmed early talks over a potential merger deal with rival MSQ Partners.

Shares in S4, which was founded by the advertising mogul in 2018, jumped in early trading on Monday as a result.

It comes after Sky News reported on Saturday that creative agency firm MSQ, which is owned by private equity group One Equity Partners, approached Sir Martin about a potential deal.

In response, S4 said on Monday that it “received a proposal” about potentially merging the two businesses.

“These discussions are at a very preliminary stage and there can be no certainty that a transaction will be forthcoming,” S4 said in statement.

The London-based firm said any deal would be structured so that S4 would acquire MSQ to form the combined business.

Sky News also reported that US firms Stagwell and New Mountain Capital have seen moves to buy S4, or parts of its business, rebuffed by Sir Martin over the past year.

Sir Martin founded S4 following his departure from FTSE 100 giant WPP. He quickly grew the business globally through a raft of acquisition deal.

The company saw its share valued soar to as much as £5 billion in 2021, but has seen this tumble to around £140 million after the advertising sector was hit hard by the global economic slowdown and growth in AI.

S4 Capital shares were up 3.8% on Monday morning.