Question mark remains over TNS-GfK merger

by Ben Bold, Brand Republic 04-Jun-08, 09:00

LONDON - The prospect of a merger between TNS and GfK hangs in the balance following the news that TNS shareholders were last night holding out for a higher offer from Sir Martin Sorrell's WPP.

WPP's last bid for the research giant, which was made on May 13 and amounted to £996m, was spurned by the TNS board.

However, according to reports, analysts said the market was hedging its bets on a higher offer from WPP, but the advertising group would have to offer over 300p a share (£1.2bn) to entice TNS shareholders away from the GfK deal.

Last month, Sorrell sought to tap into reported unease within GfK over job losses, suggesting that 1,000 staff could find themselves without a job. His comments, drew the ire of TNS and GfK, who accused him of overstating the impact that a deal would have, and of using "morally irresponsible" tactics.

Yesterday, TNS and GfK, whose boards have provisionally agreed a £2.2bn merger, said that the nil-premium deal would incorporate a plan to save costs of around €97m (£76.5m) and boost combined operating profit margins up from 11.7% to 15%.

A merger between TNS and German market research rival GfK would form a new company called GfK-TNS. The union would create a market research behemoth in the European market research industry; it would also be well placed to exploit business opportunities in emerging markets.

GfK has strength in Central and Eastern Europe, while TNS is better placed in Asia Pacific.