NEW YORK -- British holding company WPP Group lost an appeal to rescind its $629 million purchase of UK media services network Tempus Group.
The UK Takeover Panel met Wednesday to hear the appeal, in which WPP tried to revive its bid to invoke a 'material adverse change' condition of its offer for Tempus. The Panel's Executive Committee rejected that argument last week.
The Panel announced its dismissal of the WPP appeal Thursday.
A representative for the Panel declined to cite reasons for its decision, but added that WPP is entitled to apply for another hearing to the Appeal's Committee of the Panel. That appeal must be made within 24 hours after detailed reasons have been delivered to the parties, which is expected to occur on Monday.
A Tempus representative said that the company is encouraged by the panel's decision and hopes that WPP will cease its appeals and begin coordinating a smooth integration of the two companies.
WPP representatives were unavailable for comment on whether they will likely take that next appeal. Several sources said that WPP is expected to exhaust what seems like its last chance to pull out of its purchase of Tempus. WPP has cited the MAC clause in the panel's rules that would allow it to cancel its takeover of Tempus because of what WPP terms are dramatic changes in its worth since the September 11 terrorist attacks.
The Takeover Panel, as a non-statutory body composed of members of the London business community, has no legal authority to force WPP to go through with the deal. However, sources said that the panel has certain informal pressures at its disposal to demand compliance with its rulings.
"The panel can use what can be called a 'cold-shoulder clause,' meaning that it can bar WPP from future hearings before the panel," said one source close to the deal. "And when you're as acquisitive as WPP, being locked out by the panel could certainly hurt the company more than being forced to buy Tempus at this time."