WPP Makes Hostile Bid for TNS

LONDON, July 10: Advertising giant WPP Group has made a
hostile takeover offer for U.K.-based Taylor Nelson Sofres (TNS), just over a
month after the British research firm announced plans to merge with Germany’s
GfK to create the world’s second-largest global research group.

WPP is offering 173 pence in cash and 0.1889 of a new WPP
share for each TNS share. The bid values the entire issued share capital of TNS
at approximately £1.08 billion. WPP maintains that a Kantar/TNS combination
would create the second largest information, insight and consultancy group
globally. It would also deliver cost synergies of at least £52 million per
annum before tax by 2011. The bid, WPP says, is “significantly more attractive than those offered by the
‘nil-premium’ proposed GfK-TNS merger.”

WPP continues: “The dominant shareholder of GfK-TNS will be
GfK-Verein, a non-profit organization that does not have the objective of
maximizing shareholder value, and that the GfK-TNS board will consist of six
non-independent GfK appointees, in addition to a GfK appointed chairman who
will have a casting vote.”

Sir Martin Sorrell, WPP’s chief executive, said in a
statement that the company had “reluctantly” taken the bid directly to TNS’s
shareholders, noting: “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 characterized 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. In fact, WPP believes it is more
committed to maintaining the TNS brand than GfK. The offer from WPP is a
superior alternative to what is, in effect, a ‘nil-premium’ reverse takeover of
TNS by GfK and a ‘merger of unequals’. We remain willing, at the shortest of
notice, to meet with the board of TNS.”

Responding to WPP’s move, GfK says it is talks with “an
identified potential source of equity and equity related financing” for a
higher, all-cash offer.

—By Mansha Daswani