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GfK Pulls Plug on TNS Bid
GfK has cancelled plans to acquire UK rival TNS after failing to secure funding for the deal. TNS, whose shareholders must vote this week on the bid of its remaining suitor WPP, also announced 6-monthly results today with revenue and profit rises both in double figures.
 GfK and TNS first initiated a nil-premium merger in April, that would have created the worlds second-biggest market research agency behind Nielsen.
However, the pair were forced to abandon their plans after media giant WPP stepped in with a £1.08bn ($2.1bn) counter offer, in an attempt by WPP CEO Sir Martin Sorrell to combine TNS with his market research group, Kantar. TNS rejected this approach on the grounds that it 'substantially undervalued' the company.
At the time, GfK said it was preparing to raise the funds needed to trump WPP's bid, and it was rumoured that it may secure backing from Tchibo coffee billionaires Günter and Daniela Herz or private equity house Apax Partners. However, GfK had always stressed that there was no certainty it would make an offer for TNS.
In a statement today, the GfK Board explained that the terms of the available financing did not enable a 'sufficiently compelling alternative cash offer' to be made for TNS that was economically in the best interest of its shareholders.
WPP's offer still stands, but TNS is recommending that shareholders reject it; again stating that the offer price of 268.7p per TNS share undervalues the company, and suggesting that a figure of around 325p would be closer to its true value.
GfK's decision was met with disappointment by CEO David Lowden, who stated: 'WPP is being opportunistic and is seeking to acquire TNS at a value lower than what it should be.' But TNS now has a larger number of hedge funds on its register, which analysts say may make it harder for Lowden to continue to rebuff WPP's advances.
Shareholders must decide on the WPP offer by Friday.
Separately, TNS released its interim results for the six months to the end of June. During the period, revenues rose 16.7% to £580.4m and pre-tax profits were up 13.3% to £41.8m. Adjusted operating profit, excluding restructuring costs and amortization of acquired intangible assets, grew 19.6% to £54.3m.
Lowden commented: 'These results demonstrate the quality of TNS' business, the strength of our market position and the effective implementation of our strategy. We have delivered substantial growth in revenue, adjusted operating profit and adjusted earnings per share, and our shareholders will enjoy a 25% increase in the interim dividend.'
Earlier today, TNS shares were trading at 265p.
Web sites: www.gfk.com , www.tnsglobal.com , and www.wpp.com .
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