Daily Research News Online no. 8565 - GfK Vote Approves Merger as TNS and WPP Chiefs Square Up

GfK Vote Approves Merger as TNS and WPP Chiefs Square Up

July 4 2008

The Administrative Board of GfK-N�rnberg e.V. has approved the firm's merger with TNS, leaving the vote of Verein members on 21st July technically unnecessary, 'though 'important'. Meanwhile, the bosses of TNS and WPP have been exchanging increasingly hostile comments.

GfK AG's Supervisory Board Chairman Hajo Riesenbeck said the majority vote signalled 'unambiguous support' for the 'unique' TNS merger.

The Verein's Articles of Association do not stipulate that voting by the members is mandatory. However, the Board says members' support is important and MD Dr. Raimund Wildner comments: 'I am confident that the vote of the members of the Verein will also be positive.' Last week two local government bodies who are members had made it plain they would oppose the deal.

The Board and its Committee also approved a plan for the proposal of Professor Klaus L. W�bbenhorst as successor President of GfK-N�rnberg e.V. when Hajo Riesenbeck steps down to take over as Chairman of the Board of GfK-TNS plc.

TNS Chairman Donald Brydon said the vote was very pleasing, adding: 'We look forward to working with GfK to create an exciting new global force in market research that will be the envy of our peers.'

Meanwhile TNS issued a strong statement this morning in response to 'misleading' comments from Sir Martin Sorrell's WPP following rejection of his third offer, valuing TNS at £1.08bn or 260p per share. On Sorrell's claim that it had not furnished information to give a 'level playing field', TNS said: 'WPP has all the financial information on TNS that has been shared with GfK. This is more than is required to value a public company. TNS met for over four hours with WPP management and has answered numerous questions raised by WPP pertinent to the information provided. WPP is a competitor of TNS and TNS does not intend to share information with WPP that it has not shared with GfK.'

The statement said that the proposed WPP-TNS tie-up 'may offer scale but it does not fundamentally change the client offering' in the way that the GfK deal would. It also took issue with Sorrell's claims that the TNS share price had been propped up by the merger talks and bids, describing them as 'misleading'. Last night Sorrell was quoted in the press as saying: 'If we withdraw and the GfK Verein vote is unsuccessful, where will the TNS price be? Our guess is it will be about 150p.' His claims suggested the share price would otherwise have moved in line with the depressed media sector, but TNS' statement says: 'The board wishes to emphasise that TNS' business is not the media business, nor is it advertising. It provides market information and advisory services. The board believes that the strong growth prospects in its industry will be more than captured by GfK-TNS.'

Two English dailies continued their reports from Sorrell's campaign trail, with the Telegraph (www.telegraph.co.uk ) covering his lunch meeting with some of the hedge fund investors whose support could help him in a possible direct appeal to TNS shareholders. Here he put his case directly to a dozen hedge fund managers, who control an estimated 15% of TNS stock. Sorrell said he has received 'encouraging feedback' from some shareholders but has thus far only confirmed that a hostile bid is 'one option'. He added: 'We can't seem to get much traction with the board.' One obstacle will be the fact that Fidelity International, the largest shareholder in TNS with 10.3%, is also the second-largest investor in GfK.

The Guardian (www.guardian.co.uk ) reports increasingly bitter exchanges between the two leaders. It quotes Sorrell on Brydon's rejection of WPP's third approach thus: 'ill-considered, intemperate, too speedy and ignores shareholder interests ... With all due respect to Donald, I think he has lost his sense of reality.' Brydon in turn is quoted as saying that 'The board of TNS has been extraordinarily patient with Sir Martin Sorrell... It is clear that WPP are determined to try to frustrate the GfK-TNS merger for the benefit of WPP's underperforming Kantar division. It is time for Sir Martin Sorrell and WPP to stop interfering and make their intentions clear.'

Web sites are at www.gfk.com , www.tnsglobal.com and www.wpp.com .