WPP calls for clarity on Bavarian role in GfK-TNS merger plan
Wednesday, 2 July 2008
Print
Email
WPP, the advertising giant, is calling for clarification about the legal role of the Bavarian not-for-profit group with a major shareholding in GfK with regards to the proposed nil-premium merger between the German company and TNS.
WPP's two bids for TNS have been rejected by the board in favour of a tie-up with GfK, but the arrangement will not go ahead until it has been agreed by both companies' shareholders. In the run-up to the TNS vote on 18 July, WPP claims that there is a major disconnect between the role of GfK Verein – which holds a 57 per cent stake in the company – as it is laid out in the formal documentation, and the statements the company is making to the German press.
According to the official prospectus on the merger, it cannot go ahead without the agreement of 75 per cent of GfK Verein, which draws its members from Bavarian and Nurnberg state politics as well as the company's trade union and management.
But according to newspaper reports, the com-pany says it does not require such approval, leading WPP to issue a formal statement yesterday calling for clarity. The complaint also notes that the proposed GfK Verein meeting to vote on the merger has been put back from 4 July to 21 July, which means the TNS shareholders will be voting before they know whether GfK Verein is to approve the proposed ob-ligation to accept the offer.
Sir Martin Sorrell, the chief executive of WPP, will not confirm whether he plans to raise his offer. "They've got severe problems, irrespective of what we do, and if we walk away it might still come to nothing," Sir Martin said.
"There are four ways it can go: we can walk away, or stay where we are, or improve our offer or go hostile. At the moment, it is very finely balanced. There is a strong argument to say walk away, let them screw it up and see what condition the business is in, in a year's time."
WPP's first proposal was 0.1214 WPP shares plus 154p, which was then raised to 164p.
