Jeremy Warner's Outlook: Gloves are off in Sorrell versus Brydon fight

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The Independent Online

At last, a real takeover battle, as opposed to the virtual stuff that became the norm in the heyday of private equity. And in these markets, too. Anyone would think the thundering herd was back in business.

Sadly, this is unlikely to be the case, but we can at least sit back and enjoy some temporary respite, courtesy of Messrs Sorrell and Brydon. For Taylor Nelson Sofres, the market research group, the phoney war is now over and already battle has commenced on several different fronts all at the same time.

Even before Sir Martin Sorrell's WPP was forced to go hostile, the takeover tussle was shaping up to be a classic of its kind, with Takeover Panel adjudications galore. Both Sir Martin and TNS's chairman, Donald Brydon, are in their different ways veterans of the takeover scene – Sir Martin because he has acquired a veritable galaxy of different businesses in building WPP into the marketing giant it is today, and Mr Brydon as a fund manager-turned- professional non-executive director.

As a fund manager, Mr Brydon understands only too well the duty shareholders place on their directors to extract the best possible value, and, as a director, he has played a key role in selling up no fewer than three FTSE 100 companies for top-drawer prices. So far, he seems to have played his latest takeover entanglement in textbook fashion, ending up with a likely auction between WPP and GfK.

The beauty of the situation for TNS is that neither of these two parties can afford to lose, as TNS offers a unique opportunity to carve out a commanding position in an industry which has excellent long-term prospects.

As a result, the winner may end up overpaying – the winner's curse – but that's not really of any concern to Mr Brydon and his investors, and, in any case, if you believe the bulls of this intriguing little industry, even at £3 a share the price will more than justify itself on a 10-year view. You need to look through the current downturn, they insist.

Once he has set his eyes on a target, Sir Martin rarely gives up, even when it means paying top dollar. The Germans are likely to be equally stubborn. The moment Sir Martin stopped dancing around the goal and took his shot, the nil-premium merger was dead in the water.

It may have offered good long- term value, but in these markets it would have struggled to receive the 75 per cent support needed against Sir Martin's cash-and-shares bid. This is especially the case, as in the past few days great swaths of the stock have been sold into the hands of the hedge funds. None of these new shareholders is in it for the long term. From now on, the highest bid wins.

So it's on to plan B for GfK's chairman, Hajo Riesenbeck – a straight takeover bid to top Sir Martin, funded in part by private family money. GfK is not yet saying who its backers are, though it seems unlikely they are in the conventional private equity game. Without knowing the detail, it is hard to understand why even friendly family money would want to come in as a bit player in the affair, unless it is on terms exceptionally onerous to GfK.

Whatever the answer, Mr Riesenbeck is as determined as Sir Martin to secure his prey. No wonder Mr Brydon is smiling. All he has to do now is enjoy the ride – assuming Mr Riesenbeck can persuade his friendly German sugar daddy to put up the money, that is.

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