WPP refuses to raise £1.1bn offer for TNS

Sir Martin Sorrell issues 'take it or leave it' message to rebel shareholders in Taylor Nelson Sofres as he tries to end bid battle
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The Independent Online

WPP advertising boss Sir Martin Sorrell has issued an ultimatum to rival Taylor Nelson Sofres, refusing to raise his hostile £1.1bn bid and giving defiant shareholders until today to make up their minds whether to accept.

Mr Sorrell has won support from 43 per cent of TNS shareholders, and is clearly hoping his "take it or leave it" tactics will end the resistance of rebel groups holding out for more.

Cedar Rock Capital, the largest investor in TNS with 9.4 per cent, is among those who have rejected WPP's cash and shares offer.

TNS shares would almost certainly go into freefall if Mr Sorrell decided to walk away.

The present nervous state of the markets this week forced the Anglo-Swiss mining giant Xstrata to scrap its bid for Lonmin, triggering a sharp fall in the share price.

WPP, the world's second largest advertising and marketing group after US-based Omnicom, wants to bolt TNS on to Kantar, its own market research and information group. The battle has been raging all summer after the only other potential buyer, the German group GfK, abandoned merger talks when it ran into funding difficulties with Apax Partners, its financial backer.

TNS, which has been in business since the 1940s, earned profits of £83m last year on turnover of just over £1bn, providing information on marketing trends to clients in more than 80 countries.

WPP believes that there is scope for generating savings of at least £52m a year by 2011 by combining it with Kantar, which operates in similar fields in 70 countries.

The combined group would be the major player in eight of the top 10 markets of the world, with particular exposure in the fast-growing markets of Asia, Africa and the Middle East.

"Growth is being driven by continuous pressure on clients to raise their like-for-like revenue growth and to optimise their investment against a backdrop of changing demographics, decreasing product differentiation, intensifying global competition and fragmentation of the media," WPP argues.

The European Commission has cleared WPP to buy TNS, provided it sells its Television Audience Measurement services business in Europe and the TNS market research operation in Ireland if the offer succeeds.

Although WPP has given TNS investors until today to decide whether to accept the bid, it has the right to extend the offer until 16 October, although the terms cannot be changed.

WPP also has the right to amend the number of acceptances it requires from 90 per cent to 75 per cent, or even 50 per cent, although that figure appears extremely unlikely.

WPP has announced plans to shift its domicile to Ireland, citing the "complexity" of the UK tax system.

TNS shares closed at 248p, compared with the 259p value of WPP's offer.