Shares in TNS soar as GfK prepares to trump WPP

LONDON - Shares in TNS have soared today, jumping almost 12% as GfK responds to WPP Group's £1.08bn hostile bid for TNS and confirmed it plans to team up with a partner to buy the market research giant instead of pursuing a nil-premium merger.

GfK and TNS have now terminated plans for their merger and TNS has cancelled the July 18 meeting called for shareholders to approve or reject it.

However, TNS remains keen on a tie-up with GfK and has just released a statement to the London Stock Exchange saying it has permitted the German company time to work on its potential offer.

It also called on shareholders to not to accept WPP's latest 260.6p-a-share offer.

GfK has not yet made a new offer and said negotiations are at an early stage. It has not named its partner but has said it is "an identified potential source of equity and equity related financing".

WPP's offer consists of 173p in cash and 0.1889 new WPP shares for each TNS share.

TNS and GfK have agreed that no break fee needs to be paid because of the abandonment of the merger plans.

Shares in TNS have soared today. They were up 4.8% this morning, but jumped again following the breaking news of Gfk's offer. The British market research firm's shares are now up 11.9%, or 29.50, on yesterday's close to 277.5p.

Bob Willott, the editor of the Marketing Services Financial Intelligence newsletter, thinks TNS shareholders' focus is now thoroughly on short-term gain from any deal.

"I believe that under the original TNS-GfK merger deal there was a potentially attractive upside for those prepared to take a medium term view," he said. "But the intervention of WPP -- and consequent replacement of the original GfK merger plan with the possibility of a rival cash offer from GfK -- will doubtless cause the investment community to focus on the short term. 

"In those circumstances, by far the biggest influence on the outcome will be how much immediate cash is on offer irrespective of any strategic or long-term implications."