Agency: Anomaly London
By Gordon MacMillan,, brandrepublic.com, Monday, 23 August 2004 08:30AM
WPP is looking over Grey's books and although Sorrell has stopped short of saying his British ad group will make a bid, he hit back at Morgan Stanley, which said it believed the acquisition of Grey would not help WPP achieve its long-term goals.
On Friday he said: "It doesn't move the needle at all. Grey, in the context of WPP, is not enormous."
A £500m rights issue would be used to fund the acquisition if WPP did launch a bid for the last remaining independent US ad group, according to a report in The Observer.
Grey is expected to attract a price tag of around £700m although that could rise if a bidding war breaks out for Grey, which is being auctioned off.
Although Morgan Stanley doubts whether WPP will launch a bid, others are convinced it will. One industry analyst told the paper that the "market's assumption" was that Sorrell would bid and his bid would "be equity issued".
WPP reported pre-tax profits of £234.7m on Friday as revenues climbed 6% to a record £2bn on the back of adspend linked to the Olympics, Euro 2004 and the US presidential elections.
The only concern in the City is the possibility of a bidding war if Havas and private equity firms all decided to make a play for Grey.
If you have an opinion on this or any other issue raised on Brand Republic, join the debate in the Forum here.
This article was first published on brandrepublic.com