Takeover Panel reveals why WPP <BR>failed to get out of Tempus bid

LONDON - The Takeover Panel has said that WPP Group's failure to show how the September 11 terrorist attacks specifically affected Tempus was the key reason in its decision to force the group to proceed with its £432m offer for the media-buying company.

In a statement released yesterday, the panel outlined its reasons for the decision, including why it decided it was not necessary for Tempus to present financial data relating to the last three months.

Sir Martin Sorrell, the WPP CEO, had asked to see this information but had been turned down by Tempus. He later accused them of using clever accounting methods to hide the effects of September 11.

It was the panel's statement that led to WPP's decision yesterday to proceed with its bid and forgo any further appeals to the panel.

In presenting arguments to the panel, Tempus said that WPP had to distinguish between the causative effects and show what were the consequences of the attacks on Tempus's prospects, as opposed to the general and sectoral decline existing in the market before September 11. The panel accepted this argument.

The statement, which has wider implications for any future takeover bids, reveals that the panel was "satisfied that it could proceed fairly to reach a decision without these figures [Tempus's third-quarter results] being available".

It also reveals that WPP's purchase of Tempus shares on September 17 did work against them, as widely predicted by industry commentators.

The panel has also described WPP's accusations of Tempus being in breach of regulatory requirements as "unhelpful".

The findings of this case could set a precedent, making it virtually impossible for a company to invoke the material adverse change clause, thus allowing it to back out of an accepted offer. The panel has deemed that in order to meet this condition, it requires "an adverse change of very considerable significance striking at the heart of the purpose of the transaction in question".

Another contentious finding, one which could cause headaches for any other companies wishing to appeal, is the rejection by the panel of WPP's own projections of Tempus's profits for the year to December 2002.

Tempus rejected WPP's figures, but produced none of its own and the panel said that it "reached the view that there were no reliable figures for 2002 from which it could derive any useful conclusion". It said WPP's figures were "unlikely to be meaningful".

Now that the bitter battle is over, the market will be keenly observing how Tempus and WPP work together. In a statement, WPP said, "WPP's objective is now for both management teams to work closely together to integrate the two businesses and capitalise on the strategic benefits as quickly as possible."

If you have an opinion on this or any other issue raised on Brand Republic, join the debate in the Forum here.

Jennifer Whitehead, recommends

WPP Group

Read more

You have

[DAYS_LEFT] Days left

of your free trial

Subscribe now

Become a member of Campaign from just £46 a quarter

Get the very latest news and insight from Campaign with unrestricted access to campaignlive.co.uk ,plus get exclusive discounts to Campaign events

Become a member

Looking for a new job?

Get the latest creative jobs in advertising, media, marketing and digital delivered directly to your inbox each day.

Create an Alert Now

1 Why creative people have lost their way

What better way to kick off the inaugural issue of Campaign's monthly print offering than with another think piece on the current failings of our industry, written by an embittered, pretentious creative who misses "the way things used to be"...


1 Job description: Digital marketing executive

Digital marketing executives oversee the online marketing strategy for their organisation. They plan and execute digital (including email) marketing campaigns and design, maintain and supply content for the organisation's website(s).