World Business

Advertising powerhouse WPP has made a billion-pound opposing bid in the place of the British market research cluster

by Sarah Arnott

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The battle for TNS is hotting up: WPP has made a hostile £1.1bn order by reason of the company; the plans for a TNS-GfK merger have been pulled; and GfK is tiresome to put together private equity funding for an all-cash venture instead.

Before the Takeover Panel’s “put up or shut up” deadline expired yesterday morning, the WPP board tabled a formal offer for the market research group, in line through last week’s approach at 0.1889 WPP shares and 173p cash per TNS share. The proposal values TNS shares at 261.7p at remain night’s closing prices, or £1.1bn in total.

The advertising huge man, led by Sir Martin Sorrell, has been talking to TNS shareholders since the informal be nearly equal was made last week and among the conditions disposed of in yesterday’s offer is the need for the agreement of the TNS board.

Sir Martin said: “Reluctantly, we desire waived our earlier pre-condition for the board of TNS to recommend our attempt. Despite repeated efforts over more than three months to engage with TNS management, we have been unable to enter into any discussions that could lead to an agreement.

“Although our offer may be characterised by some as a ‘hostile bid’, we be persuaded that it is in no passage hostile to TNS share owners nor to TNS’s clients and people,” he said. “We confident that the present for TNS generates cost for WPP share owners and offers TNS share owners the couple specie certainty and rectitude upside.”

Unsurprisingly, given last week’s rebuttal, the TNS board was unconvinced. It swiftly condemned the offer, again, as substantially undervaluing the company, and recommended that shareholders reject it.

TNS and GfK, the German group by which it was in advanced merger talks, then dissolved their plans for a nil-premium all-share merger, including setting to one side the £10m break fee. GfK promptly confirmed it is pursuing an alternative all-cash offer with the involvement of third-party financing.

The backer is thought to have existence a German family, sooner than a conventional private equity house, and GfK said yesterday it hopes for a distribution within the nearest two weeks.

Sir Martin in a short time stepped into the breach, describing the GfK statement’s lack of detail as “flakey” and the undivided process of the merger as “verging on farce”. Last week WPP called for clarity about the legal role of the GfK Verein—the non-profit group of topical politicians, unions and economy that owns 57 per cent of GfK—and it has again and again complained that TNS has not provided it through the same advice as it has to its merger-partner. It is believed that WPP advisers yesterday took the sense to the Takeover Panel to ensure that, now GfK is a possible offeror, entirely details given to the German house are made available to WPP.

With the TNS/GfK merger opposite to the table, the timetable according to a resolution of the situation has lengthened. But the market is positive and TNS shares closed up 11 per cent at 274.5p on the hope of a bidding war.

Donald Brydon, the chair of TNS, said: “There is only one winner out of all this and that is our shareholders.”

City speculation now focuses on the value of any GfK bid—with unsubstantiated rumours pushing it as high as 280p a share— and how Sir Martin will respond. “A 280p proffer would subsist a knockout price, but WPP has made a fair sacrifice so we are not in the end game to this time,” uttered Richard Hitchcock, an analyst at Numis. “In this environment, the more cash in the bid the stronger the bidder’s hand will be. It is not conscientious about the overall level of the bid—a bid at the same level with more cash strength have in greater numbers success.”

But Sir Martin is unlikely to give up easily. Andrew Walsh, at Landsbanki, said. “Whether somewhat extra information will persuade WPP to do anything, including lift its offer, remains to be seen. But Martin Sorrell is a seasoned M&A executive and he is to be expected to keep somebody in reserve.”

In a final bizarre twist, Hering Schuppener, the German public relations firm handling the situation for GfK, is participation of GCI Group, which is owned by WPP.

The advertising group’s shares closed up 1.19 per cent at 469.5p.