The war of words between WPP Group and market research company Taylor Nelson Sofres reached new levels of acrimony as TNS unveiled details of its proposed “merger of equals” with German market research company GfK. WPP and GfK are locked in a power struggle for control of TNS.
WPP claims the two research companies will have to cut 1,000 jobs in order to make the deal add up. TNS has admitted some jobs will go, but has mooted just 500.
A TNS spokesman says: “This is a great deal for TNS and GfK shareholders but clearly a nightmare for WPP, which is why Sir Martin Sorrell [WPP chief executive] has become so touchingly interested in other people’s jobs. The reality is this deal is about growth. More jobs, not fewer. In the short run some jobs will go but we lose staff by attrition anyway.”
A source familiar with WPP thinking says: “Mergers of equals don’t tend to work. Managements over-promise in these situations. The 15% margins they have promised are unachievable.”
WPP says it is reserving its position over a counter-offer for TNS. It has made two shares-and-cash offers which were rejected by the TNS board. The WPP source adds: “WPP can walk away, make another offer, go hostile or wait a year for this deal to collapse.”
At least one City institution has indicated a full cash offer could be conclusive, given the economic climate.