The media buying agency Tempus has sacked six per cent of its workforce since becoming the bid target of Havas of France and Britain's WPP.
Tempus has axed 120-150 jobs in the last three weeks as part of a wide-ranging cost-cutting programme. All forms of discretionary spending are being squeezed including travel and entertaining.
The cuts increase fears that Tempus is struggling to meet its profit forecasts as the advertising slowdown gathers pace. It will also increase City fears that WPP and Havas are risking over-paying.
In its statement to the stock market on 19 July regarding the Havas offer, Tempus said it expected its interim figures for the six months to 30 June to be "satisfactory" when it reports in mid-September. However, it described the trading environment as "particularly challenging" and said it was taking steps to get costs in line.
News of the cuts emerged as WPP yesterday confirmed its unsolicited 555p per share cash bid for Tempus, valuing the company at £437m. Havas was last night mulling a counter-bid, having offered 541p a share.
One alternative to a bid battle being suggested yesterday was that WPP, Havas and Tempus could merge their media buying operations into a single venture jointly owned by WPP and Havas. However, this could run into problems with the competition authorities.
There is continued speculation Havas will table an increased offer for Tempus this morning, when it is due to publish second-quarter figures.
The Tempus board yesterday withdrew its recommendation of the original Havas bid, paving the way for an auction.Attention continues to centre on the 38 Tempus directors and senior managers who signed irrevocable undertakings to accept the Havas offer. A source close to Havas said: "They've all signed irrevocables but that doesn't mean all would walk if someone else came in."
Chris Ingram, the Tempus chairman, owns 15 per cent of the company and senior management 10 per cent. Havas has built its stake to 28.5 per cent.
Mr Ingram, a long-time foe of WPP's chief executive Sir Martin Sorrell, is thought unlikely to take up his offer of becoming co-chairman of an enlarged buying group combining the UK and European buying functions of Tempus with WPP's The Media Edge. However, top directors in Germany and Italy as well as many in the UK are thought to be more open to a possible link-up.
WPP, which paid about 200p per share for its 22 per cent interest, said acquiring Tempus would yield around £13m in synergies. It said a deal would enhance earnings in the first full year.
The latest manoeuvres in the battle over Tempus coincided with WPP reporting an acquisition-aided 80 per cent rise in interim pre-tax profit to £248m. Net new business billings, a key measure of advertising company performance, were $1.4bn (£900m), while total sales gained 65 per cent to £2bn.
The group expressed caution about its outlook for the second half. It said: "Prospects for revenue growth for the latter half of 2001 may be even more difficult, although industry projections for advertising market growth in 2002 look slightly better than 2001." First-half gains were around 3 per cent compared with 15 per cent a year ago.
Sir Martin said: "The over-riding concern is that what has essentially up to now been a business-to-business recession will spill over in the consumer sector." He added: "There don't seem to be signs of that yet."
WPP stock closed up 4p at 667p. Tempus shares fell a penny to 581.5p.Reuse content