GfK mulls cash bid for TNS after WPP approach

German research group GfK has responded to WPP’s £1.08bn hostile bid for Taylor Nelson Sofres by dropping its proposed nil-premium merger with the British market research company. GfK says it is pursuing an “alternative proposal”.

GfK says the proposal would involve an alternative all-cash offer being made for TNS with the involvement of an identified potential source of equity and equity-related financing.

It says that talks are in the early stages, but it has received strong interest in this transaction. WPP is offering 173p in cash and 0.1889 of a new WPP share for each TNS share.

The offer represents a premium of 52% to where TNS shares stood before news of its planned merger with German group GfK in late April. Sir Martin Sorrell, WPP chief executive, is keen to combine TNS with WPP’s Kantar market research business, which he says will create the world’s second-largest insight, information and consultancy group.

The TNS board has already rejected the bid, which WPP chief executive Sir Martin Sorrell directed straight to shareholders. TNS had rejected three earlier bids from WPP made over the past three months, saying they substantially undervalued the company.

TNS said it had agreed to terminate the merger with GfK, to let the German group advance its discussions with the potential source over financing an alternative proposal. TNS shareholders were due to vote on the merger with GfK on July 18.