GfK, the German market information group, has pulled out of the running to take over Taylor Nelson Sofres (TNS), its UK counterpart, leaving Sir Martin Sorrell's WPP Group as the only (hostile) bid in town.
The news of GfK's withdrawal left TNS no warmer towards the advertising giant's current offer of 0.1889 WPP shares and 173p cash – or around 269p per share at current prices. Hot on the heels of yesterday's publication of half-year results showing revenue up 17 per cent and adjusted profits up by 20 per cent, the board reiterated its stance. "Our results this morning are terrific and they only underscore why there is much more value in this business than that represented by the offer from WPP," said Donald Bryden, TNS's chairman. "The board is completely clear that our advice to shareholders is not to accept, and to insist that anybody who wants to buy the company recognises its value."
What constitutes a fair value remains to be seen. TNS shares closed down 0.65 per cent at 267p yesterday, clearly below the WPP offer value, but Mr Bryden attributed the price to the market's view of the WPP transaction. David Lowden, TNS's chief executive, indicated that comparable transactions would imply a price above 300p per share, and some put the bar as high as over 320p.
The group had already brushed off two unsolicited approaches from WPP earlier in the year, and was pressing ahead with a nil-premium merger with GfK when Sir Martin launched a formal bid in July.
The offer put an end to the GfK scheme and forced the German group to look into making a bid of its own.
The collapse of GfK's counterbid effort came after six weeks of attempts to line up the necessary financing. Initial discussions with Germany's coffee-chain millionaires, the Hertz family, progressed some way before petering out, and when subsequent negotiations with Apax, the private equity group, foundered, it pulled the whole deal down.
The Apax talks are believed to have been scuppered by a combination of factors.
Not only was GfK, which is 57 per cent-owned by a non-profit "Verein", unable to cede the degree of corporate control Apax required. But the group's management also had difficulty in securing the necessary support from their shareholders, according to sources.
WPP's first deadline for TNS shareholders closes tomorrow, although it is likely to be extended. Sir Martin, WPP's chief executive, has been an outspoken critic of GfK's behaviour since the merger collapsed.
He said: "We are just glad that GfK has finally clarified the position – or the non-position."
The biggest loser in the situation is GfK, and its chairman, Hajo Riesenbeck. "This puts him in a very vulnerable position," said one industry insider.
"First he recommends a nil-premium merger and has to back out of it, then he makes bold statements about buying TNS and that also comes to nothing. Who will want to come to TNS about consolidation in the industry when he is clearly not master of his own destiny?"Reuse content