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WPP Submits Hostile Bid For TNS
Following the advertising giant’s last-minute bid for TNS, GfK Raises Bid. WPP will take proposal directly to shareholders.
July 9, 2008
On Wednesday, the London-based communications and advertising giant WPP moved to submit its £1.082 billion bid for London-based market research firm TNS directly to TNS shareholders. The listed communications company has been rejected three times by TNS and faced a Wednesday morning deadline to outline its strategy regarding the acquisition.
Last week, the communications company’s third offer was snubbed by TNS management, likely related to a widespread perception that WPP, led by chief executive officer Martin Sorrell, is attempting to stymie TNS’ proposed merger with GfK.
Regarding his company’s offer, Sorrell stated, “Reluctantly, we have waived our earlier pre-condition for the board of TNS to recommend our offer. Despite repeated efforts over more than three months to engage with TNS management, we have been unable to enter into any discussions that could lead to an agreement. Although our offer may be characterised by some as a ‘hostile bid’, we believe that it is in no way hostile to TNS share owners nor to TNS’s clients and people.”
The offer is valued at 260.6 pence per share, in cash certainty and equity upside. In his comments, Sorrell attempted to make the case that an acquisition by WPP is a “superior alternative” to the offer by GfK, asserting that the nil-premium takeover is a undesirable “merger of unequals.”
Merrill Lynch, Perella Weinberg, and Goldman Sachs are financial advisers to WPP.
Meanwhile, GfK has terminate its proposed merger with TNS, and will work to structure a competing all-cash bid for the company, backed by an undisclosed German financer. The German market research company could bid as high as 280 pence per share, nearly 20 pence per share higher than WPP’s offer. This would effectively block Sorrell’s bid, unless TNS shareholders act contrary to the board’s recommendation.
Rothschild is acting as financial adviser to GfK in the transaction.
Corporate governance experts have recently come out against the GfK merger, helping to build a case for WPP.
Following this morning announcements, TNS shares rose from 248 pence on Tuesday to 261.25 pence on Wednesday morning.
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