TNS rejects improved approach from WPP

By Dan Lalor

LONDON (Reuters) - Market research company Taylor Nelson Sofres TNS.L rejected an improved approach worth 1.08 billion pounds from WPP (WPP.L), saying it preferred its proposed merger with German peer GfK (GFKG.DE).

WPP's latest proposal, worth 260 pence per TNS share, substantially undervalued the company, said TNS, which had previously opened its books to WPP after rejecting approaches at 230 pence and then 241.8 pence.

TNS shareholders will vote on a nil-premium merger with GfK on July 18 while GfK's investors will vote on July 21.

WPP, the world's second-largest advertising company, which has a July 9 deadline from Britain's Takeover Panel to make an offer for TNS, said it would only make an offer if it got the unanimous recommendation of TNS's board.

TNS shares were up 3.4 percent at 232.75 pence at 1:00 p.m. British time, suggesting investors do not see an early change of heart from the board. WPP stock recovered from a five-year low at 448.75 pence in early trading to be up 0.6 percent at 457.75 pence.

WPP chief executive Martin Sorrell said he wanted to combine TNS with WPP's Kantar market research business to create the world's second-largest insight, information, and consultancy group in a market that has grown at about 5 percent in recent years, led by emerging economies.

"Growth is being driven by continuous pressure on clients to raise their like-for-like revenue growth and to optimise their investment against a backdrop of changing demographics, decreasing product differentiation, intensifying global competition, the fragmentation of the media and the impact of digital development," WPP said.

Winning TNS would diversify WPP's revenue stream, leaving it better placed to weather any global economic downturn.