Having been rebuffed in several bids to acquire Taylor Nelson Sofres on friendly terms, Sir Martin Sorrel has now decided to bypass the TNS board and management to take a $2.14 billion buyout bid by WPP Group directly to TNS shareholders. The move has apparently scuttled efforts by TNS to merge on an equal basis with GfK and GfK is instead seeking financial backing to make its own buyout bid for TNS to top WPP.
"The board has unanimously rejected the offer which substantially undervalues TNS. Shareholders should take no action and should not complete any form of acceptance in connection with WPP’s offer," said TNS Chairman Donald Brydon after the latest action by WPP. But that board rejection may not mean much, since Sorrell is seeking a vote by all shareholders.
WPP’s offer is for 173 pence in cash and 0.1889 of a new WPP share for each TNS share. WPP notes that’s a 52% premium over the closing price for TNS before it announced the deal to merge with GfK and a 21% premium over the TNS closing price on July 8th before the WPP offer was announced.
WPP said combining TNS with its own Kantar unit would create the world’s second largest market research, after The Nielsen Company. “WPP believes that the Enlarged Group would be able to lead the industry in terms of the quality of market insight and the way it is delivered to and used by clients,” the company said in its pitch to TNS shareholders. WPP also said that the combination it proposes would “provide opportunities for the clients and people of TNS which are significantly more attractive than those offered by the ‘nil-premium’ proposed GfK-TNS merger.”
That merger is no longer pending. The board of TNS has put on hold indefinitely its shareholder meeting that had been scheduled for July 18th to give GfK time to put together its own bid to counter WPP.
“Although our offer may be characterised by 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,” said Sorrell in the WPP announcement.
RBR/TVBR observation: Either way, there will be a new giant in international consumer research. The Nielsen Company has stayed out of this bidding war, not swayed by early speculation that it too would go after TNS. The question now is whether GfK can find backers to make a bid of 280 pence per share, topping the 260.6 pence bid by WPP and, if the UK’s Guardian newspaper is correct, setting a price higher than Sorrell is willing to go.