Sorrell goes hostile after TNS knock-back

Sir Martin Sorrell doesn't like taking no for an answer. So he's taking his TNS bid direct to shareholders.

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Last Updated: 31 Aug 2010

Sorrell’s giant media company WPP said this morning that it was taking its £1.1bn bid for market research firm Taylor Nelson Sofres direct to shareholders, after the company’s management rebuffed him no fewer than three times. This isn’t the kind of reception Sorrell has come to expect, and not surprisingly, he’s refusing to go quietly into the night. He’s still keen to merge TNS with WPP’s Kantar business, so ahead of today’s ‘put up or shut up’ deadline (as imposed by the Takeover Panel), he’s decided to take the nuclear option.

Launching its bid this morning, WPP said it had ‘reluctantly’ waived its earlier precondition for a board recommendation. But although this might now look, smell and taste like a hostile bid, WPP insisted that it’s really very warm and cuddly. ‘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,’ it protested-too-much today.

The most likely spanner in the works of Sorrell’s masterplan remains German company Gfk, with whom TNS has been trying to negotiate a so-called ‘merger of equals’ for months. Rumour has it that GfK has now signed up a deep-pocketed financial backer and is prepared to trump any WPP bid, to make sure the merger happens (which it effectively confirmed today). However, Sorrell was scathing about the idea today, dismissing it as: ‘in effect, a nil-premium reverse takeover of TNS by GfK and a merger of unequals’. He also argued that WPP was much more committed to keeping the TNS brand alive.

All of which means that TNS shareholders could have some interesting options on the table on July 18, the date scheduled for them to vote on the TNS-GfK merger. Sorrell’s offer of 260p-per-share (part-cash and part-WPP shares), is a 52% premium to the share price before this deal came to light – and reports suggests that any offer from GfK would be pitched even higher, perhaps nearer 280p.

But with TNS chairman Donald Brydon – a City veteran whose reputation is just as fearsome as that of the WPP boss – leading the opposition to any WPP deal, Sorrell clearly has a job on his hands to pull this one out of the bag...


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