The board of market research firm TNS (Taylor Nelson Sofres) has advised its shareholders to accept a £1.14 billion ($2 billion) takeover bid from Martin Sorrell’s WPP.
TNS rebuffed no less than four offers from WPP since the beginning of the year, but has now backed down after claims from WPP that over 60 percent of its shareholders would agree to a hostile cash and shares offer.
In a statement released yesterday, TNS said that its board “now recommends that shareholders accept the WPP offer,” citing advice from Deutsche Bank, JPMorgan Cazenove and Moelis & Company. It added, however, that it still believed the offer undervalued the business, but that it did not want TNS investors left with a minority interest in what would likely become an unlisted company.
WPP hopes TNS, merged with its existing market research operation, Kantar, will create a serious competitor to leading global research firm Nielsen. Following a successful purchase, a large portion of WPP’s Martin Sorrell has argued revenue would come from its research, PR and consulting operations, helping to limit its exposure to a possible advertising downturn.
WPP waded into the online ad arena with its acquisition of 24/7 Real Media last year, and TNS’s online research abilities could compliment the firm’s search marketing and display ad offerings.
Although suggestions have been made that the £1.14 billion ($2 billion) price tag overvalues the firm in such a tumultuous financial climate, others argue that the research industry will remain healthy during a downturn, with advertisers seeking reassurance and accountability for their spending.
TNS had been pursuing a merger with rival GfK, but the German firm dropped its bid upon hearing the news of WPP’s hostile intentions in July. GfK said at the time that it planned to investigate “an alternative all-cash offer” with anonymous financial backing, but nothing appears to have materialised.
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