GfK AG, Germany's largest market researcher, has abandoned a bid for Taylor Nelson Sofres Plc after failing to raise enough financing to counter a 1.1-billion-pound (US$2 billion) hostile offer by WPP Plc.
GfK, which compiles the German consumer confidence index, told Taylor Nelson late Tuesday it was ending efforts to buy the London-based company.
Taylor Nelson is still urging shareholders to reject WPP's bid, saying the offer undervalues the company. The July 9 hostile bid effectively broke up a planned friendly merger between Taylor Nelson and GfK to create the world's second-biggest market researcher behind Nielson Co. WPP wants to combine Taylor Nelson with its Kantar market research unit to boost revenue from non-advertising sources.
"TNS can hope for a counter bidder, but that seems most unlikely," Alex De Groote, an analyst at Panmure Gordon and Co, told Bloomberg News. "WPP doesn't need to raise its offer because there's no one else to bid against."
Taylor Nelson shares fell 4.50 pence, or 1.7 percent, to 264.25 pence yesterday. WPP's cash-and-stock offer values the company at 268.77 pence. Before yesterday, the stock traded above the offer value on speculation that GfK would make a higher bid. WPP shares fell 1 percent to 501.5 pence.
GfK's decision was met with a "degree of disappointment," Taylor Nelson Chief Executive Officer David Lowden said during a conference call yesterday.
Shareholders must decide on the WPP offer by Friday. De Groote said it was "very very likely" the bid would succeed.
"WPP is being opportunistic and is seeking to acquire this at a value lower than what should be paid," Lowden said.
Taylor Nelson management will meet shareholders in coming days to prove "why we believe WPP should be paying more," he said.
The Nuremberg, Germany-based company dropped plans to top WPP's bid because financing available "did not enable a sufficiently compelling alternative cash offer," the company said in a statement yesterday.
The company ended "all discussions in relation to financing" for a possible offer.
Taylor Nelson also said yesterday that first-half profit fell on administrative costs, including charges linked to the failed merger with GfK.
Net income fell to 19.6 million pounds, or 4.7 pence a share, from 22.2 million pounds, or 5.1 pence, a year earlier, the company said.
