WPP makes £1.08bn hostile bid for TNS

LONDON - WPP Group has made a £1.08bn hostile bid for market research company TNS, while GfK is reported to be preparing a counter-bid to ensure its agreed merger of equals with TNS prevails.

WPP's move gives TNS shareholders 10 days before the general shareholder meeting on July 18 to decide whether to vote against the company's planned merger with German market research firm GfK.

However, the Financial Times has reported today that the German company has been preparing a counter-offer in the event of WPP making a bid. It said that GfK could make an offer as early as this morning, but no announcement has yet been made.

WPP's offer is 173p in cash and 0.1889 of a new WPP share for each TNS share. Based on the closing price of 464p per WPP share on July 8 2008, the offer values each TNS share at 260.6p and the entire issued share capital of TNS at approximately £1.082bn.

Sir Martin Sorrell, chief executive of WPP, said that his company had been forced to make a hostile bid after failing over three months to get TNS's management to back its approaches. Last week, WPP made its third approach to TNS with an offer valued at £1.078bn, which was duly rejected.

Sorrell said: "Reluctantly, we have waived our earlier pre-condition for the board of TNS to recommend our offer. Despite repeated efforts over more than three months to engage with TNS management, we have been unable to enter into any discussions that could lead to an agreement.

"Although our offer may be characterised be some as a 'hostile bid', we believe that it is in no way hostile to TNS share owners nor to TNS's clients and people.

"In fact, WPP believes it is more committed to maintaining the TNS brand than GfK."

Hedge funds, which own 15% of TNS shares, and major shareholder Fidelity are expected to have an influence on the outcome of the battle.

TNS's share price rose 4.8% to 260p this morning while WPP's fell 2.5% to 452.5p.