Just hours after WPP Group’s hostile takeover bid today, market research giant Taylor Nelson Sofres has terminated its merger agreement with German research company GfK so that GfK can pursue a separate bid for the company.
GfK in turn confirmed today that it is negotiating with an undisclosed financial firm to mount an all-cash offer for TNS.
In a statement, GfK said negotiations with the third party are “at an early stage,” and reserved the right to make a mixed offer (such as cash and stock) for TNS depending on how talks progress with the prospective financial partner.
TNS also cancelled its planned emergency shareholder meeting, set for July 18, to consider the merger with GfK, and urged shareholders to reject the takeover bid from WPP because it “substantially undervalues TNS.”
The responses from TNS and GfK came after WPP took its battle to acquire TNS directly to shareholders with a hostile takeover bid valued at almost $2.2 billion, the holding company confirmed.
WPP’s latest offer comes on the day it was required to make a new bid for TNS or exit the process, per last week’s ruling by the U.K.’s Takeover Panel.
TNS’ board of directors had previously rejected three offers from WPP in favor of a merger with German market research firm GfK, which was announced in April.
In a statement, WPP CEO Martin Sorrell said the company “reluctantly” decided to take its case directly to shareholders.
“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,” Sorrell said. “Although our offer may be characterized by some as a ‘hostile bid,’ we believe that it is in no way hostile to TNS share owners nor to TNS’ clients and people. In fact, WPP believes it is more committed to maintaining the TNS brand than GfK. The offer from WPP is a superior alternative to what is, in effect, a ‘nil-premium’ reverse takeover of TNS by GfK and a ‘merger of unequals.’ We remain willing, at the shortest of notice, to meet with the board of TNS.”
TNS has rejected previous offers from WPP as too low.
After rejecting WPP’s third offer on July 2, TNS defined itself as “a unique company and has an attractive platform in this fast growing and dynamic sector and as such should command a commensurate premium valuation.”
London-based TNS also accused WPP of making several undervalued bids “and [generating] considerable press commentary and innuendo…purely to frustrate the merger of GfK and TNS.”
If it succeeds in acquiring TNS, WPP would merge the company with its own Kantar market research arm, which it said would become the second-largest insight, information and consultancy group in the world behind Adweek parent the Nielsen Co.
The resulting company would boast revenue exceeding $14.4 billion, and WPP said post-merger synergies would boost TNS operating margins from 9.9 to 15 percent, which would be in line with WPP’s current margins.