Sir Martin Sorrell's WPP yesterday finally conceded defeat in its battle to abandon a £432m bid for media buyer Tempus after two attempts to pull out of the deal.
WPP said it had decided not to apply for leave to contest a second ruling from the Takeover Panel last week that the advertising group must proceed with its 555p-a-share offer for Tempus.
The decision followed the panel's publication of its reasons for not allowing WPP to withdraw the offer on the grounds that the effects of 11 September had materially affected Tempus's prospects.
The panel concluded WPP had "failed to demonstrate that there was a material adverse change" to the longer-term prospects of Tempus. It said: "Meeting this test requires an adverse change of very considerable significance striking at the heart of the purpose of the transaction in question."
Analysts expect Sir Martin's repeated efforts to invoke the escape clause to have soured relations between the two companies, prompting speculation about how many of Tempus's key personalities would work for the enlarged media agency. There is a history of animosity between Chris Ingram, Tempus's chairman, and Sir Martin.
Mr Ingram – who was once famously alleged to have said that he would rather lick the floor of an abattoir with his tongue than work for the WPP chairman – yesterday declined to comment on his intentions beyond reiterating he would help to oversee the initial integration process before deciding what to do. Mr Ingram, who was offered the co-chairmanship of the combined group, stands to net £64m from the deal.
WPP said it had remained convinced of the long-term strategic benefits of the merger and would work closely with Tempus to integrate the two businesses "as quickly as possible". It did not outline when the integration process would begin, although a source close to WPP said the two sides had spoken yesterday to try and accelerate the process.
The refusal to allow WPP to invoke the material adverse change clause will set aprecedent for future takeovers as it reinforced the idea that a change in general market condition does not constitute a "material adverse change" in a company's prospects. WPP's shares fell 3 per cent to 647p. Tempus gained 11.5p to 535p.Reuse content