GfK withdraws leaving WPP in a one-horse race for TNS

GERMANY-- GfK has given up plans to make a bid for TNS, after a seven-week search failed to secure the financial backing needed to rival WPP's hostile takeover offer.

The news leaves WPP's £1.17bn bid as the only offer on the table. TNS's chief executive David Lowden today made a last-ditch call for shareholders not to accept the offer by Friday's deadline, playing up the firm's prospects as an independent business.

But analysts were not convinced. Citigroup said today that GfK's withdrawal “should more or less guarantee” that WPP will be successful in acquiring TNS, while Steve Liechti of Investec said Lowden's aim of 325p per TNS share was overambitious.

He told Research: “What TNS have done today is put out there the most bullish thing they could, as you'd expect, to get the numbers up and raise the bar, but I'm not sure it's enough. The basis of Lowden's comments is past deals, profit multiples, stuff like that. You can argue that that would imply a premium overall, but I'd argue that markets have moved on. The business environment is more negative.”

GfK's plan to make an all-cash bid came about after WPP's hostile approach scuppered earlier plans for a GfK-TNS merger. The firm held talks with German businessman Günter Herz and private equity groups but in a statement this morning said: “The terms of the financing available did not enable a sufficiently compelling alternative cash offer to be made for TNS that was also economically in the best interests of the GfK shareholders.”

CEO Klaus Wübbenhorst told Bloomberg today that the firm “didn't want TNS at any price”.

With less than two days left, it is unlikely that enough shareholders will accept WPP's offer by Friday, but the final deadline is still several weeks away.

Author: Robert Bain