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.
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This article was first published on brandrepublic.com