'Merger of Equals' Off: Now GfK Bids for TNS

GfK, backed by an as-yet unnamed investor, is preparing to make a counter-offer for TNS in response to WPP's £1.08bn ($2.1bn) hostile bid announced this morning.

WPP's previous three offers have been rejected by the TNS Board on the grounds that they 'substantially' undervalued the company. Today's fourth offer assessed TNS at 260.6p a share (173p in cash, plus 0.1889 new WPP shares for each TNS share) and was made directly to TNS shareholders.

WPP appealed to TNS investors to accept the new approach, saying it offered 'superior value and greater certainty' than the merger deal that TNS agreed with GfK. 'We believe that the offer for TNS generates value for WPP share owners and offers TNS share owners both cash certainty and equity upside,' commented WPP CEO Sir Martin Sorrell in a statement.

Sorrell stated his belief that the latest offer is 'no way' hostile to TNS share owners nor to TNS's clients and staff.

WPP, which wants to combine TNS with its Kantar market research arm to create the second largest information, insight and consultancy group in the world, also said it is more committed to maintaining the TNS brand than GfK would be.

Sorrell added that the combined organisation would hold leadership positions in key geographies, competencies and sectors including retail, media and health care.

Following this latest approach, GfK and TNS have pulled the plug on plans for their merger of equals and TNS has cancelled the July 18 meeting at which shareholders would have been called on to vote on the merger.

This afternoon, TNS confirmed in a statement that GfK is preparing a counter-offer, and also asked its shareholders not to accept WPP's most recent proposal.

While GfK says negotiations are at an early stage, the German firm is actively pursuing a proposal which would involve an alternative all-cash offer being made for TNS. The firm is in talks with an unnamed potential investor, identified as a 'potential source of equity and equity related financing', and says it has received strong indications of interest in such a transaction.

'We will and must make a better offer than WPP,' a GfK spokesman vowed.

GfK CEO Klaus Wuebbenhorst told German news agency dpa that in case of a possible takeover of TNS, he would be in charge of the newly created company.

Shares in TNS soared 10.6% to 274p, following GfK's response to Sorrell's WPP bid. However, shares in WPP were down 11.75p or 2.53% following the announcement.

No break fee will be payable because of the abandonment of the merger plans.

Web sites: www.wpp.com , www.tnsglobal.com , and www.gfk.com .

All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas, 2024- by Nick Thomas, unless otherwise stated.

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