TNS shares surge after WPP makes £1bn play

LONDON - TNS shares have risen 12% after the company rejected a £948m offer made over the weekend by Sir Martin Sorrell's WPP, which was itself an attempt to gatecrash the market research company's merger talks with rival GfK.

WPP made the 230p-a-share offer on Saturday, four days after TNS and GfK said they were in discussions about a nil-premium merger. TNS's share price was at 215p last week and its shares were trading just above 240p at 9am this morning.

After TNS rejected the offer on Sunday in favour of continuing talks with GfK, WPP chief executive Sorrell expressed disappointment, as well as puzzlement, that attempts to engage with TNS management "have been hindered and resisted".

Sorrell left the door open to making a higher bid, with the following message to TNS shareholders.

He said: "While we continue to review our position, we encourage TNS shareholders to urge their board to engage with us rather than simply persisting on an exclusive basis with a 'nil-premium merger' arrangement with GfK."

For its part, TNS said its board had unanimously decided WPP's offer was not in the best interests of its shareholders.

It added that its talks with GfK were making significant progress and the proposed tie-up would accelerate revenue opportunities and deliver operating efficiencies.

According to a German newspaper, the two companies are expecting to achieve £80m in cost savings, much higher than the £30m-£45m expected by analysts after the talks were revealed.

WPP owns Kantar, the fourth-largest market research group in the world with 2007 revenues of $1.89bn. TNS is the third largest with $2.14bn and GfK the fifth largest with $1.59bn. The first and second are Nielsen with $4.71bn and IMS Health with $2.19bn.

Prior to the TNS-GfK talks, the next move in the market research industry was expected to be WPP picking up Synovate, the sixth-largest business with revenues of $867m.

Synovate is part of Aegis, the media and market research group being pursued by Havas chairman Vincent Bollore. Bollore is expected to attempt to take control of Aegis, and sell off Synovate.