From grudge match to a grudging defeat
So, to Sir Martin Sorrell the spoils as he hauls his latest booty, Taylor Nelson Sofres, the world’s largest publicly quoted market research company, off the field of a marathon and intensely bitter takeover battle.
To the very last, Donald Brydon, chairman of the defending team, was grudging in his admission of defeat. If he had to give in to WPP, he implied, it was only because a rout on the stock market forced his hand: “The markets have come down and shareholders are running for the door as you would expect. We have to recognise reality.”
Indeed, though it is perhaps a pity that he and his team did not recognise that reality earlier, before their “last stand at the Alamo” defence created such poisonous mutual animosity. With what effect on staff morale we can only guess.
Although TNS fought doggedly in the initial stages, to all intents and purposes it was doomed once Sorrell managed to scupper the proposed nil-premium merger with Nuremberg-based GfK back in July. Why? Because once WPP had put a firm proposal on the table and sweetened it a bit, TNS and GfK were unable to match the money for a fully-fledged merger. Desperate though they were for a white knight, neither the Herz family nor Apax came galloping to the rescue. After that, it was a matter of whistling in the graveyard. Did Brydon really think that holding out would force Sorrell to improve the WPP offer, despite a background of tumbling share prices? Perhaps the only hope remaining was the contrarian one that Sorrell might, in worsening market conditions, walk away (as indeed he threatened to do at several points). Yet this always seemed a highly unlikely outcome to a deadly duel of corporate machismo with a man who has never, in over 20 years, been beaten in a hostile takeover battle.
But if TNS was outclassed tactically, do its arguments for independence nevertheless have a certain moral validity even in defeat? The net effect of the merger will be to catapult Kantar, the research arm of WPP, to second largest market research organisation in the world after Nielsen. Kantar badly needs that fillip. Though strong in the Asian growth markets, its global presence has, up to this point, been patchy (it is fifth largest in revenue terms). TNS might rightfully object to being a stooge for Kantar’s growth problems. But the very fact that it considered a merger with similar-sized GfK in the first place means it can hardly object to the argument of global critical mass per se.
As it happens, not everyone accepts the virtues of critical mass as self-evident. The rapid growth of “online” boutiques such as YouGov and Toluna has demonstrated that the research monoliths are not getting it all their own way.
For now, however, Kantar need not concern itself with such matters. A lengthy post-merger restructure will conceal any immediate chinks in its panoply.
As for Sorrell, it’s on to the next battle: in this case a legal one against his old adversary, former head of WPP’s Italian operations Marco Benatti.
