Nuremberg-based GfK said it was unable to line up financiers that would allow it to trump WPP’s £1.1billion (€1.4 billion) offer.
“The management board, after careful consideration, has concluded that the terms of the financing available did not enable a sufficiently compelling alternative cash offer to be made for TNS that was also economically in the best interests of the GfK shareholders,” the company said.
GfK and TNS in April proposed a null-premium merger that would have given control of GfK to TNS and created the world’s No. 2 market research company behind Nielsen. But that announcement sparked WPP, run by celebrity executive Martin Sorrell, to launch a cash and share counter offer for TNS.
GfK then began scrambling to find a deep-pocketed partner to back an all-cash approach. Although GfK refused to name potential financiers, German press reports said it approached private equity group Apax Partners and the heirs to the Tchibo coffee fortune.
TNS Tuesday reiterated its rejection of the WPP offer, noting “previous acquisitions in the sector have valued target companies above WPP’s valuation of TNS.”
Investors approved of GfK’s decision – the shares traded 4.7 percent higher in late morning Frankfurt trade at €24.31. However, with the prospect of a bid battle off the table, TNS shares fell 1.8 percent to 264.00 pence in London. WPP was off 1.1 percent at 501 pence.
GfK’s proposed bid was also controversial among members of the market research association that owns a majority of the company. Some members feared the group would lose its German voice was others fretted at the possibility of job losses in the southern German state of Bavaria, where GfK is based.