The bid battle over Tempus Group, the media buying group, went into retreat yesterday when Havas Advertising withdrew its offer, citing the economic impact of the attacks in the US.
The move left WPP Group, which had countered with a higher bid for Tempus, also contemplating whether it would proceed.
Opinion was divided over whether WPP, which trumped a £425m offer from Havas with a £437m cash proposal in July, would see out the deal or invoke a little-used section of the Takeover Code to abort its bid. The panel that administers the code is expected to hear from representatives of WPP and Tempus next week.
Investors, however, bet the deal was dead. Tempus stock plunged 24 per cent to 422.5p.
WPP, which raised its stake to 25 per cent on Monday after buying more than 2 million shares at 555p, was said not to be buying yesterday. Its shares, anticipating that the deal would lapse, rallied 20.5p to 507p.
Commenting on the decision to recommend WPP's offer and abandon his group's bid, Alain de Pouzilhac, chief executive of Havas, said: "We must not go through with this bid now that a recession is more and more likely. To make a higher bid would be unreasonable in an environment which is getting worse by the day and which has been hit even harder by the recent terrible events in the US."
It is thought that the Takeover Panel may be sympathetic to WPP abandoning the deal on the basis that material circumstances at Tempus had changed adversely. Sources said such a decision could be based on a decline in the business performance of Tempus as well as non-financial factors.
Commenting on the economic environment, Mr de Pouzilhac said: "The current uncertainty surrounding the medium and long-term economic outlook has also severely affected the advertising market. This situation has been exacerbated by the tragic events of the last 10 days in the US, contributing to a further lack of visibility for the future, particularly in the American, but also other markets."
Havas, which acquired 2.54 million Tempus shares at 541p, is sitting on a loss of £3m with the fall in the target company's share price. If WPP decided to proceed with its offer, Havas would emerge with a £4.6m profit based on a kill-fee negotiated with Tempus and slight gains from selling its stake.
Tempus management, led by Chris Ingram, the chairman, said it would now recommend the WPP offer to shareholders. It was unclear last night whether management, which owns 25 per cent of Tempus, would run the business should WPP prevail.
The first closing date for WPP's offer is 1 October. The company could walk away if its offer gets less than 90 per cent acceptance.Reuse content