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TNS' Main Shareholder Rejects WPP Bid
In the UK, employee-owned investment firm Cedar Rock Capital - the largest shareholder in TNS - is understood to have rejected ad giant WPP's latest £1.1bn offer.
Andy Brown, CEO and Portfolio Manager at Cedar Rock, which hold 9.4% of TNS, told Times Online in May that WPP's offer undervalued TNS. Today, the paper has learnt that Cedar Rock has rejected the offer for a second time.
This decision follows yesterday's news that German market research group GfK has pulled out of plans to acquire TNS after failing to secure sufficient funding for a bid.
This has left WPP as the only bidder, but TNS is recommending that shareholders reject the offer on the grounds that the offer price of 268.7p per TNS share is too low, and a figure of around 325p would be closer to the firm's true value.
According to Times Online, TNS CEO David Lowden is meeting industry rivals, including AC Nielsen, and private equity groups in an effort to find an alternative bidder. While acknowledging that it would be difficult to find an interested party in the current economic climate, Lowden told the newspaper: 'We are knocking on doors to see if there is interest in TNS and we must continue to pursue that.'
'I believe that WPP is being opportunistic' said Lowden, 'when the market is low, it is trying to secure what it sees as a strategically attractive asset at a price that is below what shareholders should insist upon'. Lowden adds that he believes WPP should pay 13.5 times EBITDA (earnings before interest, tax, depreciation and amortisation), which reached £140m in 2007.
Lowden is today holding a 'roadshow' to urge shareholders to hold out for a higher offer from WPP's CEO Sir Martin Sorrell. He said he is concerned for the future of TNS if the WPP offer is accepted, and adds: 'If Sorrell does not seek to engage the management, it could be detrimental to the future success of TNS. TNS is a people business and that is what makes it successful.'
The current deadline for acceptance of the WPP offer by shareholders is 3pm tomorrow, when it is anticipated that a large number - particularly hedge funds - will vote in its favour. However, the deadline for acceptances can be extended to the end of September - don't be surprised if this one has some way to run.
Web sites: www.cedarrockcapital.com , www.tnsglobal.com and www.wpp.com .
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