German authorities to vote against TNS-GfK merger

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The Independent Online

A proposed merger of the market research companies Taylor Nelson Sofres and GfK of Germany could be threatened by political opposition to the deal, it emerged yesterday. Several German local authorities, which own stakes in GfK through an unusual shareholder structure, have said they will vote against the deal at a meeting on 4 July.

The tie-up cannot go ahead without the approval of the Gfk-Verein, the not-for-profit group which founded GfK in Nuremberg in 1954 and still owns a 57 per cent stake in the company.

However, several leading members of the Verein, which is made up of local authorities, trades unions and other public bodies, have indicated that they do not support the merger, which would result in job losses in Germany.

Yesterday, both Nuremberg City Council and the Bavarian state government said they would vote against the plans. More than 25 per cent of the Verein's 571 members would have to oppose the deal to block it, so taken in isolation the opposition from the two authorities is not a problem for GfK and TNS. However, their publicly-voiced rejection of the proposals could crystallise support from other groups in Germany, where some staff and union officials have reacted angrily to the deal.

GfK has previously admitted that it has had a tough time persuading the Verein to back the TNS deal, but it said yesterday that it was still confident it could make the case. "That is a challenge for us to work more in order to convince members," a spokesman said of the views expressed by Nuremberg and Bavaria.

TNS and GfK have agreed a merger that would create the world's second-largest market research company. They believe the combined group would be able to find cost savings of €97m, with each company's investors holding about half of the equity. The deal has already attracted support from the leadership of the Verein, which is chaired by Hajo Riesenbeck, who also serves as chairman of GfK. Nevertheless, any threat to the merger would be seized upon by WPP, the advertising group which is keen to gatecrash the deal.

Sir Martin Sorrell, WPP's chief executive, has said he may make a hostile bid for TNS, having already had three previous unsolicited bids rejected. He is keen to combine TNS with WPP's Kantar market research unit.