German market research group GfK has confirmed that it is mulling an all-cash offer for market research, information and business insight company Taylor Nelson Sofres (TNS), jettisoning plans for a nil-premium merger.
The announcement follows on the heels of the UK-based advertising group WPP announcing a hostile bid for TNS, but without raising its £1 billion cash and share offer for the group. (See: Battle for market research firm TNS heats up; GfK approves merger while WPP threatens to go hostile)
GfK said that it is ''actively pursuing a proposal which would involve an alternative all-cash offer being made for TNS with the involvement of an identified potential source of equity and equity related financing."It said that talks were presently at an early stage, though it added that it had received "a strong indication of interest in this transaction." The Times had reported that GfK and an unidentified financial bidder were planning for a last minute counter-bid for TNS if WPP went ahead with a firm offer for the company. WPP launched its hostile bid, while refusing to hike its 260p cash and share offer for TNS above the £1 billion deal already tabled.
There had been speculation that WPP could increase its offer to 280p a share to tempt TNS shareholders to opt for its deal instead of the nil-premium merger the market research group had been pursuing with GfK.
For his part, Sir Martin, who captains WPP commented on the deal saying that WPP had ''reluctantly'' waived its earlier pre-condition for the board of TNS to recommend our offer, while acknowledging that despite repeated efforts over more than three months, WPP had been unable to engage TNS' management or enter into any discussions that could lead to an agreement.
He said that although WPP's offer might be classified as a 'hostile bid' by some, WPP believed it is in no way hostile to TNS share owners nor to TNS's clients and people. Sir Martin said WPP is ''more committed to maintaining the TNS brand than GfK." WPP says that with TNS joining forces with its own market research arm Kantar, potential savings would be in the range of over £50 million a year.
TNS released its own statement in which it advised its shareholders to take no action in response "to WPP's latest unsolicited act", adding that TNS's board would write to them to set out its reasons for rejecting WPP's offer. It said, "In the light of this rejection, TNS has agreed with GfK to terminate the proposed merger and has permitted GfK to advance its discussions with an identified potential source of equity and equity related financing in connection with an alternative possible offer for TNS as an alternative proposal." Donald Brydon, chairman at TNS, said "The Board has unanimously rejected the offer which substantially undervalues TNS. Shareholders should take no action and should not complete any form of acceptance in connection with WPP's offer."
GfK said it is now ''actively pursuing'' a proposal that would involve an alternative all-cash offer being made for TNS, with the involvement of an identified potential source of equity and equity related financing. GfK's announcement followed WPP chief executive Sir Martin Sorrell's hostile bid, which was tabled earlier in the day in accordance with the "put up or shut up deadline" that was set by the takeover panel of the London Stock Exchange. Reports indicate that GfK has on its side an unnamed financial backer who will allow it to further sweeten its 280p-per-share offer for TNS.
A merger of Taylor Nelson with either GfK or WPP would create the world's No. 2 market research group, ranked just below Nielson Co. BV.