Information  X 
Enter a valid email address

Taylor Nelson Sofres (TNS)

  Print      Mail a friend       Annual reports

Tuesday 03 June, 2008

Taylor Nelson Sofres

Merger Update

RNS Number : 7994V
Taylor Nelson Sofres PLC
03 June 2008
 

Click on the link below to view this announcement in PDF format:

http://www.rns-pdf.londonstockexchange.com/rns/7994V_1-2008-6-2.pdf 

 

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION, INCLUDING AUSTRALIA, CANADA, JAPAN AND THE UNITED STATES



FOR IMMEDIATE RELEASE


3 June 2008


GfK Aktiengesellschaft ("GfK") and Taylor Nelson Sofres plc ("TNS")



MERGER OF EQUALS BETWEEN GFK AND TNS

TO CREATE A MAJOR NEW FORCE IN MARKET INFORMATION


●         The Management Board of GfK and the TNS Board are pleased to announce that they have agreed on the terms of a merger of equals (the “Merger”) to create a new, major market information group, to be named GfK-TNS plc (“GfK-TNS”).
●         GfK and TNS believe that the Merger will deliver significant value to both GfK’s and TNS’ shareholders through enhanced business opportunities and substantial operating efficiencies.
●         Both GfK and TNS achieved over 5 per cent. underlying organic revenue growth in the first quarter of 2008. At the end of April 2008, the order books of both companies were significantly ahead of the previous year.
●          GfK and TNS, two global leaders in market information and insight, have a shared vision and strategy to provide knowledge and insight that help clients to make better business decisions.
●          The new group, GfK-TNS, will be better positioned to meet client needs in an increasingly global and digital environment. GfK-TNS will provide a new sector‑led approach for clients, integrating syndicated and custom services, based on:
●         a compelling offering in syndicated services;
●         the world’s most extensive custom research network with a complementary geographic fit, a leading position in all the major markets and a strong position in the fast-growing emerging markets, where GfK’s strength in Central and Eastern Europe is complemented by TNS’ excellent coverage of Asia Pacific;
●          specific expertise in key client sectors combined with industry-leading research expertise; and
●          increased emphasis on global accounts and client service.
●          GfK and TNS believe that the Merger will create significant opportunities to generate additional revenues and accelerate revenue growth by:
●          rolling-out existing products and services across the extended network;
●          leveraging their complementary client bases;
●          creating new services from shared expertise; and
●          integrating the business’ offering to provide more advisory services delivering better understanding of the relationship between consumer attitudes and behaviour.
●          The annual pre‑tax benefits through cost reduction are expected to be at least €97 million (£76 million) by the end of the third full year following Completion, with related non- recurring costs to achieve such reductions expected to be around €120 million (£94 million). Further details are set out in the Merger Benefits Reports contained in Appendices D and E inclusive. Explanation of the sources of the Merger benefits and basis of preparation is contained in Appendix F.
●          Following the Merger, the Management Board of GfK and the TNS Directors expect the Merger to be earnings enhancing, before goodwill and purchase price amortisation charges and restructuring costs, from the first full year. This statement regarding earnings enhancement is not a profit forecast and should not be interpreted to mean that GfK-TNS’ future earnings per share will necessarily match or exceed the historical published earnings per share of TNS or GfK.
●          Following the Merger, the GfK-TNS Board will be chaired by Hajo Riesenbeck. Donald Brydon will become the Senior Independent Director. Executive directors will be Chief Executive David Lowden, Finance Director Christian Weller von Ahlefeld, Petra Heinlein, Dr. Gérard Hermet and Pedro Ros. Professor Dr. Klaus Wübbenhorst, currently Chief Executive of GfK, will join the GfK‑TNS Board as a non-executive director and the representative of GfK-Nürnberg e.V., GfK‑TNS’ largest shareholder following completion of the Merger.
●          GfK-TNS will have operations in 111 countries. It will have its global head office in London, and the German head office in Nürnberg where the Enlarged Group will have significant business operations. Further, a central head office function of GfK-TNS will be maintained in Nürnberg.
●          In 2007, the Enlarged Group would have had combined revenues of €2.7 billion (£1.9 billion), Adjusted EBITDA of €388.5 million (£265.8 million) and Adjusted Operating Income of €319.1 million (£218.4 million). On a combined basis, the Adjusted Operating Margin would have been 11.7 per cent. The Management Board of GfK and the TNS Directors have an objective to reach an Adjusted Operating Margin for the Enlarged Group in the medium term of beyond 15 per cent. Accounting policy differences mean that the pro-forma financial information for the Enlarged Group may, when published in the Circular and Prospectus, be different to the information provided in this announcement. The basis for the foreign exchange rates used is set out in Appendix C of this announcement. 
●          The Management Board of GfK and the Supervisory Board of GfK each support the Merger and intend to recommend that GfK Shareholders accept the Offer through which the Merger will be effected. The TNS Board also supports the Merger and recommends that the TNS Shareholders vote in favour of the Merger at the TNS General Meeting.
Key terms of the Merger of Equals
●          GfK-TNS will be created through a merger of equals of GfK and TNS, to be effected by way of a public exchange offer pursuant to sections 29(1) and 34 of the German Securities Acquisition and Takeover Act (Wertpapiererwerbs – und Übernahmegesetz) by TNS for GfK, with the consideration being the issue of 11.74 New TNS Shares for each GfK Share to the GfK Shareholders who accept the Offer.
●          Assuming full acceptance of the Offer by GfK Shareholders, TNS Shareholders and GfK Shareholders will each hold approximately 50 per cent. of the share capital of GfK-TNS following completion of the Merger.
●          GfK-Nürnberg e.V., the largest shareholder in GfK with a shareholding of 56.8 per cent. of the existing issued share capital of GfK, has indicated its support for the Merger by providing an irrevocable undertaking in respect of its entire shareholding in GfK, subject to the approval of the GfK-Nürnberg e.V. Advisory Board and the GfK-Nürnberg e.V. Members and certain other conditions. Following Completion of the Merger, GfK-Nürnberg e.V. will be the largest shareholder in GfK-TNS with a shareholding of approximately 28.7 per cent. of GfK-TNS based on currently issued and outstanding shares and assuming full acceptance of the Offer by GfK Shareholders.
●          For so long as GfK-Nürnberg e.V. owns or controls at least 15 per cent. of the shares of GfK-TNS, it will have the right to appoint one non-executive director to the board of GfK-TNS and the benefit of certain other protections contained in the GfK-TNS Articles and a Relationship Agreement with TNS. GfK-Nürnberg e.V.’s initial appointee to the GfK-TNS Board will be Prof. Dr. Klaus Wübbenhorst, currently Chief Executive of GfK.
●          GfK-TNS will have its primary listing in London, with trading on the London Stock Exchange’s main market for listed securities, and a secondary listing on the Frankfurt Stock Exchange.
●          The Merger is currently expected to complete during the last quarter of 2008. The Merger will only be implemented, and the Offer will only be published, if the GfK-Nürnberg e.V. Advisory Board and the GfK-Nürnberg e.V. Members approve GfK-Nürnberg e.V.’s irrevocable undertaking to accept the Offer and if approval of the Merger is obtained from TNS Shareholders. The Merger and the Offer are also subject to certain conditions, including a minimum acceptance level of 75 per cent. of the GfK Shares, the non-occurrence of a material adverse change in respect of the businesses of GfK or TNS, certain merger control approvals and Admission.
Commenting on today’s Merger announcement:

Prof. Dr. Klaus Wübbenhorst, Chief Executive of GfK said: 


"A combined GfK-TNS is a wonderful opportunity and now is the right time to bring our businesses together. The two companies are a perfect fit and have a long and successful track record of working together. The new group will enable us to benefit from the dynamics of a fast-changing and growing market. I believe this combination is in the best interests of clients, employees and shareholders and I look forward to us working together."


David Lowden, Chief Executive of TNS said:


"GfK and TNS are ideal partners. The new business we are creating will be a global leader in the market information industry. We believe that this merger will also create substantial value for both sets of shareholders. It will provide to clients an enhanced service offering that meets their needs in today's fast-changing markets and will bring new opportunities to employees in an enlarged group. This is an exciting moment in the history of the market information industry. I am looking forward to leading the combined GfK-TNS for the benefit of all stakeholders."

This summary should be read in conjunction with the full terms of the following announcement.

A presentation for analysts and investors will be made today at 9:00am UK time (10:00am German time). The presentation will be webcast live and the webcast archive will be available afterwards for replay. The webcasts can be accessed via www.gfktns-merger.com. Remote participants can listen to the presentation and take part in the live Q&A session by joining via one of the following conference call numbers:

International access number:    +44 20 8609 0581

UK toll free number:               0800 358 1448

German toll free number:         0800 180 2225

A Circular and Prospectus will be despatched to the TNS Shareholders in due course. The Offer Document and related offer documentation will be published for GfK Shareholders in due course.

Terms used in this summary but not defined herein shall have the meanings given to them in Appendix G

Enquiries:



GfK

Prof. Dr. Klaus Wübbenhorst, Chief Executive

Bernhard Wolf, Global Head of Corporate Communications

Tel: +49 911 395 0

Tel: +49 911 395 2733

Tel: +49 911 395 2012



Rothschild

(Financial Adviser to GfK) 

Jonathan Paine, Frank Herzog, Adam Greenblatt

Tel: +44 20 7280 5000



Hering Schuppener Consulting

(Public Relations Adviser to GfK) 

Alexander Geiser

Tel: +49 69 92 18740



TNS

David Lowden, Chief Executive

Janis Parks, Head of Investor Relations

Tel: +44 20 8967 0007



Deutsche Bank

(Lead Financial Adviser and Joint Broker to TNS)

Kristian Bagger, Gavin Deane, Manny Chohhan

Charles Wilkinson, Martin Pengelley (corporate broking)

Tel: +44 20 7545 8000



JPMorgan Cazenove

(Financial Adviser and Joint Broker to TNS)

Malcolm Moir, Andrew Hodgkin, Hugo Baring

Tel: +44 20 7588 2828



Brunswick

(Public Relations Adviser to TNS) 

UK - David Yelland, Jonathan Glass 

Germany - Christine Graeff



Tel: +44 20 7404 5959

Tel: +49 69 24 00 55 12



The New TNS Shares have not been, and will not be, registered with the SEC under the Securities Act, or under the laws of any state, district or jurisdiction of the United States. This announcement does not constitute an offer to sell or the solicitation of an offer to buy securities in the United States. Securities may not be offered, sold or delivered, directly or indirectly, in the United States absent registration or an exemption from registration under the Securities Act. There will be no public offer of securities in the United States.


This announcement should not be sent, directly or indirectly, in or into, or by use of mails or any means or instrumentality (including, without limitation, facsimile transmission, telephone and internet) of interstate or foreign commerce of, or any facilities of a national securities exchange of, the United States.


The laws of the relevant jurisdictions may affect the availability of the Offer to persons not resident in Germany. Persons who are not resident in Germany, or who are subject to the laws of any jurisdiction other than Germany, should inform themselves about, and observe, any applicable requirements. 


The New TNS Shares to be issued in connection with the Merger have not been, and will not be, registered under or offered in compliance with applicable securities laws of any state, province, territory or jurisdiction of Canada, Australia or Japan and no regulatory clearances in respect of the New TNS Shares have been, or will be, applied for in any jurisdictions other than the UK and Germany. Accordingly, unless an exemption under the relevant securities laws is applicable, the New TNS Shares are not being, and may not be, offered, sold, resold, delivered or distributed, directly or indirectly, in or into, Canada, Australia or Japan or to, or for the account or benefit of, any person resident in Canada, Australia or Japan.


The Merger benefits and related non-recurring costs to achieve the Merger benefits referred to in this announcement have been calculated on the basis of the existing cost and operating structures of the companies and by reference to current prices and the current regulatory environment. These statements relate to future actions and circumstances which, by their nature, involve risks, uncertainties and other factors. Because of this, the cost reductions referred to may not be achieved, or those achieved could be materially different from those expected. These statements should not be interpreted to mean that the earnings per share in the first full financial year following Completion, or in any subsequent period, would necessarily match or be greater than those for the relevant preceding financial period. Further details set are out in the Merger Benefits Reports contained in Appendices D and E inclusive.


Deutsche Bank AG is authorised under German Banking Law (competent authority: BaFin - Federal Financial Supervisory Authority) and regulated by the Financial Services Authority for the conduct of UK business. Deutsche Bank AG is acting as lead financial adviser and joint corporate broker to TNS, and no-one else in connection with the Merger, and will not be responsible to anyone other than TNS for providing the protections afforded to the clients of Deutsche Bank AG nor for providing advice in relation to the Merger or any matter referred to herein.


JPMorgan Cazenove, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting as financial adviser and joint corporate broker to TNS, and no-one else, in connection with the Merger and will not be responsible to anyone other than TNS for providing the protections afforded to the clients of JPMorgan Cazenove nor for providing advice in relation to the Merger or any matter referred to herein.


Rothschild, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively as financial adviser to GfK in connection with the Merger and no-one else and will not be responsible to anyone other than GfK for providing the protections afforded to clients of Rothschild or for providing advice in relation to the Merger, the content of this announcement or any matter referred to herein.


UBS is authorised under German Banking Law (competent authority: BaFin - Federal Financial Supervisory Authority) and is acting exclusively as fairness opinion adviser to GfK in connection with the Merger and no-one else and will not be responsible to anyone other than GfK for providing the protections afforded to clients of UBS or for providing advice in relation to the Merger, the content of this announcement or any matter referred to herein.


Deutsche Bank, JPMorgan Cazenove, Rothschild and UBS make no representations, express or implied, with respect to the accuracy or completeness of any information contained in this document and accept no responsibility or liability for, nor to they authorise, the contents of this document (or its issue), or for any other statement made or purported to be made by them (or any of them), or on their behalf, in connection with TNS, GfK, GfK-Nürnberg e.V., the TNS Shares, the GfK Shares or the Merger.


This announcement does not constitute an offer to purchase, sell or exchange or the solicitation of an offer to purchase, sell or exchange any securities or the solicitation of any vote or approval in any jurisdiction pursuant to the Merger or otherwise, nor shall there be any purchase, sale or exchange of securities or such solicitation in any jurisdiction in which such offer, solicitation, sale or exchange would be unlawful prior to the registration or qualification under the laws of such jurisdiction.


This announcement does not constitute a prospectus or prospectus equivalent document. Holders of shares in TNS and GfK are advised to read carefully the formal documentation in relation to the Merger once it has been despatched.


Forward looking statements


Certain statements contained in this announcement constitute "forward-looking statements". In some cases, these forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "prepares", "anticipates", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology. Investors should specifically consider the factors identified in, or incorporated by reference into, this document which could cause actual results to differ before making an investment decision. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of TNS, GfK and/or of the Enlarged Group, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding TNS', GfK's and/or the Enlarged Group's present and future business strategies and the environment in which the TNS Group, GfK and/or the Enlarged Group will operate in the future. Such risks, uncertainties and other factors will be set out more fully in the Prospectus and other formal documentation in relation to the Merger and include, among others: risks relating to the market insight and research consulting market in general and challenges in integrating the businesses of the TNS Group and the GfK Group. These forward-looking statements speak only as at the date of this announcement. Except as required by the FSA, the London Stock Exchange, the Listing Rules or any other applicable law, TNS and GfK expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained in this document to reflect any change in the their expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.


Dealing Disclosure Requirements


Under the provisions of Rule 8.3 of the City Code, if any person is, or becomes, "interested" (directly or indirectly) in one per cent. or more of any class of "relevant securities" of TNS, all "dealings" in any "relevant securities" of TNS (including by means of an option in respect of, or a derivative referenced to, any such "relevant securities") must be publicly disclosed by no later than 3.30pm (London time) on the London business day following the date of the relevant transaction. This requirement will continue until the offer becomes, or is declared, unconditional as to acceptances, lapses or is otherwise withdrawn or on which the "offer period" otherwise ends. If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire an "interest" in "relevant securities" of TNS, they will be deemed to be a single person for the purposes of Rule 8.3 of the City Code.


Under the provisions of Rule 8.1 of the City Code, all "dealings" in "relevant securities" of TNS by either GfK-Nürnberg e.V. or TNS, or by any of their respective "associates", must be disclosed by no later than 12.00 noon (London time) on the London business day following the date of the relevant transaction.


A disclosure table, giving details of the companies in whose "relevant securities" "dealings" should be disclosed, and the number of such securities in issue, can be found on the Panel's website at www.thetakeoverpanel.org.uk.


"Interests in securities" arise, in summary, when a person has long economic exposure, whether conditional or absolute, to changes in the price of securities. In particular, a person will be treated as having an "interest" by virtue of the ownership or control of securities, or by virtue of any option in respect of, or derivative referenced to, securities.


Terms in quotation marks are defined in the City Code, which can also be found on the Panel's website. If you are in any doubt as to whether or not you are required to disclose a "dealing" under Rule 8 of the City Code, you should consult the Panel.


NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION, INCLUDING AUSTRALIA, CANADA, JAPAN AND THE UNITED STATES


3 June 2008


MERGER OF EQUALS BETWEEN GFK AND TNS

TO CREATE A MAJOR NEW FORCE IN MARKET INFORMATION


1.      Introduction

The Management Board of GfK and the TNS Board are pleased to announce that they have reached agreement on the terms of a merger of equals to create GfK-TNS. The Merger provides a unique opportunity to create a new force in the market information industry from the complementary businesses of GfK and TNS, which share a common vision and strategy of delivering knowledge and insight that helps clients to make more effective business decisions. The new group will provide an enhanced service designed to meet clients' changing market information needs in an increasingly global and digital environment as well as creating new, exciting opportunities for GfK-TNS employees. 

2.     The Merger

The Merger is to be effected by way of an offer by TNS for GfK with the consideration to be satisfied by the issue to GfK Shareholders who accept the Offer of 11.74 New TNS Shares for each GfK Share. Assuming full acceptance of the Offer by GfK Shareholders, following the Merger, TNS Shareholders and GfK Shareholders will each own approximately 50 per cent. of the enlarged share capital of GfK-TNS with GfK-Nürnberg e.V., GfK's largest shareholder, owning approximately 28.7 per cent. of GfK-TNS based on currently issued and outstanding shares.


Subject to the satisfaction of certain conditions, details of which are set out in section  of this announcement, the Merger is expected to be completed during the last quarter of 2008. Completion of the Merger is conditional, amongst other things, on shareholders holding at least 75 per cent. of GfK's existing issued share capital accepting the Offer.


3.     GfK-TNS

The company will be known as "GfK-TNS plc" and will be led by a board of directors drawn from both GfK and TNS. The non-executive directors will include Professor Dr. Klaus Wübbenhorst, the current Chief Executive of GfK, who will join the GfK-TNS Board as the representative of GfK-Nürnberg e.V., GfK's largest shareholder. GfK-TNS will have its primary listing in London, with its shares traded on the London Stock Exchange's main market for listed securities, and a secondary listing on the Frankfurt Stock Exchange. GfK-TNS will have its global head office in London, and its German head office will be in Nürnberg where the Enlarged Group will have significant business operations.  Further, a central head office function of GfK-TNS will be maintained in Nürnberg.  


4.     Recommendation

The Management Board of GfK, the Supervisory Board of GfK and the TNS Board each consider that the terms of the Merger are fair and reasonable.  

The Management Board of GfK and the Supervisory Board of GfK have received advice in relation to the Merger from Rothschild. In providing advice to the Management Board of GfK and the Supervisory Board of GfK, Rothschild has relied upon the Management Board of GfK's commercial assessment of the Merger. Rothschild and UBS have each agreed to provide a fairness opinion to the Management Board of GfK and the Supervisory Board of GfK in relation to the Merger. In providing a fairness opinion, Rothschild and UBS assume and rely upon the Management Board of GfK's commercial assessment of the Merger and, among other things, the projections for GfK, prepared by the management of GfK.

The TNS Board has received advice in relation to the Merger from Deutsche Bank and JPMorgan Cazenove. In providing advice to the TNS Board, Deutsche Bank and JPMorgan Cazenove have relied upon the TNS Board's commercial assessment of the Merger.  

The Management Board of GfK and the Supervisory Board of GfK each believe that the Merger is in the best interests of GfK and the GfK Shareholders as a whole. The TNS Board believes that the Merger is in the best interests of TNS and the TNS Shareholders as a whole. Accordingly:

 
·                     it is the intention of the Management Board of GfK and the Supervisory Board of GfK to recommend in their substantiated statement pursuant to Section 27(1) of the German Securities Acquisition and Takeover Act (Wertpapiererwerbs-und Übernahmegesetz) that the GfK Shareholders accept the Offer which will effect the Merger; and
·                     the TNS Board recommends that TNS Shareholders vote in favour of the Resolutions to be put to the TNS General Meeting, as they intend to do in relation to their own individual holdings which amount in aggregate to 528,634 TNS Shares, representing approximately 0.13 per cent. of the existing issued share capital of TNS as at 2 June 2008.

5.      INFORMATION ON GFK AND TNS

5.1    GfK Group

The GfK Group is a global market information group listed in Germany and with its head office in Nürnberg, Germany. GfK traces its history back to 1934 when the Association for Consumer Research was founded in Germany. Since the 1980s, GfK has expanded internationally, so that today more than 80 per cent. of its employees are based outside Germany.  

The GfK Group comprises 115 operating companies which deliver services in all major consumer, pharmaceutical, media and service sector market segments via a network that covers over 100 countries worldwide, with offices in 65 countries. The GfK Group offers a full range of market research services, from data collection and analysis to consulting.

As set out in GfK's annual report for the year ended 31 December 2007 (and without any material adjustment), the GfK Group reported sales of €1,162.1 million (£795.1 million) and generated €117.1 million (£80.1 million) of income from ongoing business activities before tax. As at 31 December 2007, the GfK Group's net assets stood at €509.6 million (£374.3 million) and net debt, including pension obligations and other interest bearing liabilities, was €472.9 million (£347.3 million).

5.2    TNS Group

TNS is a global market information and insight group, which traces its history back to the 1940s. The TNS Group operates across substantially all sectors of the market information industry, serving global and local clients from offices in over 80 countries worldwide. TNS provides its clients with customised information and insights, using specialist sector knowledge and in-depth research expertise. It also provides market measurement and analysis through its syndicated services. These comprise consumer panel services in Western Europe, Latin America and Asia Pacific and strategic media intelligence and audience measurement services across Europe, North America and Asia Pacific.  

As set out in the audited financial information relating to TNS for the year ended 31 December 2007 (and without any material adjustment) the TNS Group reported turnover of £1,067.7 million (€1,560.4 million) and generated £83.2 million (€121.6 million) profit before tax for that period. As at 31 December 2007, the TNS Group's net assets stood at £115.1 million (€156.7 million) and net debt was £353.6 million (€481.4 million). 

6.      Background to, and reasons for, the Merger

6.1    Business rationale and Merger benefits

The combination of GfK and TNS will bring together two long-established and well-respected market information organisations that share a common commitment to client service and the delivery of high quality sector-based information, knowledge and insights that improve understanding of consumer behaviour. GfK and TNS are two strong businesses, well positioned for growth in a dynamic industry that is currently estimated to be growing at between 4 and 5 per cent. per annum.  

The Merger will create a new group that better meets clients' needs in an increasingly global and digital environment. It provides an opportunity to bring together the complementary geographic networks, sector specialisations and service offerings of GfK and TNS, creating a global market information group. GfK-TNS will provide a new sector-led approach for clients, integrating syndicated and custom services, based on: 

·                    a compelling offering in syndicated services;
·                    the world’s most extensive custom research network with a complementary geographic fit, a leading position in all the major markets and a strong position in the fast growing emerging markets, where GfK’s strength in Central and Eastern Europe is complemented by TNS’ excellent coverage of Asia-Pacific;
·                    specific expertise in key client sectors combined with industry-leading research expertise;
·                     increased emphasis on global accounts and client service; and
·                     industry-leading research expertise, enhanced by GfK-TNS’ improved combined capabilities.

Each of these areas is considered in greater detail in section 7 below.

The Management Board of GfK and the TNS Directors believe that this enhanced offering will create significant new revenue opportunities and accelerate revenue growth by:

·                     rolling out existing products and services across the extended network;
·                     leveraging the complementary client bases;
·                     creating new services from shared expertise; and
·                     integrating the business’s offering to provide more advisory services delivering better understanding of the relationship between consumer attitudes and behaviour.

 

The Management Board of GfK and the TNS Directors also believe that the Merger provides opportunities for increased operational efficiencies and cost savings. The increased scale of the Enlarged Group will enable standardisation of data collection and production processes and harmonisation of delivery platforms and related infrastructure across the Enlarged Group. Additionally, they believe that scale efficiencies can be derived from the combination of the existing GfK and TNS operations, such as corporate functions, call-centres and internet access panels, as well as an extension of their offshoring activities. There is also scope for further savings from improved procurement and research and development activities and the potential rationalisation of the property portfolio.

Together, these initiatives are expected to deliver annual pre-tax benefits through cost reductions to the Enlarged Group of at least €97 million (£76.3 million) by the end of the third full year following Completion, representing around 4 per cent. of the existing combined cost base. The expected phasing of these cost reductions is likely to result in the achievement of approximately €25 million (£19.7 million) of annual savings in the first full year following Completion; approximately €58 million (£45.6 million) of annual savings in the second full year following Completion and approximately €92 million (£72.3 million) of annual savings in the third full year following Completion, reaching €97 million (£76.3 million) by the end of the third full year following Completion.

The non-recurring costs to achieve such reductions are expected to amount to around €120 million (£94.4 million) and are likely to be substantially incurred in the first full year following Completion. The expected phasing of these costs is likely to be approximately €89 million (£70.0 million) in the first full year following Completion with a further €18 million (£14.2 million) in the second full year following Completion and the remainder in the third full year following Completion.

Appendix F contains an explanation of the sources and basis of preparation of the Merger benefits. The estimated Merger benefits have been reported on under the City Code by KPMG in Appendix D , and by TNS' financial advisors, Deutsche Bank and JPMorgan Cazenove, in Appendix E .  


The Merger benefits and related non-recurring costs to achieve the Merger benefits referred to in this announcement have been calculated on the basis of the existing cost and operating structures of the companies and by reference to current prices and the current regulatory environment. These statements relate to future actions and circumstances which, by their nature, involve risks, uncertainties and other factors. Because of this, the cost reductions referred to may not be achieved, or those achieved could be materially different from those expected. These statements should not be interpreted to mean that the earnings per share in the first full financial year following Completion, or in any subsequent period, would necessarily match or be greater than those for the relevant preceding financial period. Further details set are out in the Merger Benefits Reports contained in Appendix D and E inclusive.


Following the Merger, the Management Board of GfK and the TNS Directors expect the Merger to be earnings enhancing, before goodwill and purchase price amortisation charges and restructuring costs, from the first full year. In addition, the Management Board of GfK and the TNS Directors have an objective to reach an Adjusted Operating Margin for the Enlarged Group in the medium term of beyond 15 per cent. This statement regarding earnings enhancement and the medium term Adjusted Operating Margin is not a profit forecast and should not be interpreted to mean that GfK-TNS' future earnings per share will necessarily match or exceed the historical published earnings per share of TNS or GfK.


6.2    The changing market information industry

Market information is a dynamic industry, currently estimated to be growing by between 4 and 5 per cent. per annum. This growth is being driven by a number of changes taking place within the industry.

With the globalisation of their own industries, clients are demanding consistent, high-quality information on an international basis, with increasing emphasis on faster-growing, developing markets. Clients require not only accurate data, but also insightful interpretations and recommended courses of action based on that data, to help them better understand consumer behaviour. They choose to spend their budgets on these added-value services, while at the same time requiring basic data faster and more cheaply.

Growth is also being driven by a broadening client base, as more industries turn to research to help understand rapid change and intense competition in their own sectors. Consumer preferences are changing rapidly. Media fragmentation, especially the rapid development of the internet, has led to increased demand for information and insights into new areas of consumer behaviour, together with a growing demand for measurement of the return on investment from marketing activities. Several new potential sources of data, such as the internet and associated social networking websites, which are rapidly expanding, have created demand for research in these media and an understanding of how consumer behaviour online affects purchasing decisions both online and offline.  

The response of the market information industry has been characterised by the following trends:

·                   a shift in emphasis towards the emerging markets, particularly those of Brazil, Russia, India and China, partly to tap into the relatively high rate of macro-economic growth, and partly in response to the movement of multi-national clients into those markets;
·                     the development of global networks to better meet the needs of multi‑national clients;
·                     an increasing emphasis on quality standards in online data collection;
·                     a move to more cost-effective and faster methods of data collection using the internet, such that in 2007 global online research spend was US$3.6 billion, an annual increase of 23 per cent. (Source: “Inside Research” March 2008);
·                    an increasing emphasis on expanding analytical and advisory services, and the development of innovative products and analyses;
·                    a broadening of the client base, as more industries turn to research to help understand rapid change and intense competition in their own sectors; and
·                    the incorporation and combination of new sources of data, such as the internet.

The Management Board of GfK and the TNS Directors believe that the new company GfK-TNS will be able to respond more effectively to these trends by significantly improving implementation of their common strategic vision of delivering knowledge and insight that help clients make more effective business decisions. 

7.      Objectives and strategy of the Enlarged Group

7.1    A business model, led by client sectors, integrating syndicated and custom services

The Merger will enable the Enlarged Group, with its expanded geographic presence, to accelerate the move towards a client sector-led business model. Each sector, being FMCG, Media, Retail and Technology and Business Services, would offer core syndicated services of market measurement or metrics, together with custom research. Basing the sectors around a core syndicated service ensures ongoing contact with clients, who utilise this valuable information on a continuous basis, allowing for a deeper understanding of clients' market information needs. It also provides the opportunity to offer custom research services to a broader client base. Within these sectors, the Enlarged Group's provision of the combination of consumer behaviour metrics with attitudinal information will allow it to deliver advisory services that address the key marketing issues facing clients in rapidly changing marketplaces.

The Management Board of GfK and the TNS Directors believe that an enhanced sector model has the capacity to allow the Enlarged Group to: 

●         deliver a greater range of capabilities, more effectively, to clients;
●         create a sharper focus on the delivery of measurement and insight into consumer behaviour;
●         provide clients with excellent industry knowledge and insight; and
●         generate significant shareholder value by enabling enhanced delivery of the Enlarged Group’s common strategic vision.

7.2    A compelling offering in syndicated services

Currently, syndicated services account for slightly more than 60 per cent. of GfK's revenue and 25 per cent. of TNS' revenue. Following the Merger, the proportion of the Enlarged Group's revenue represented by syndicated services is anticipated to be approximately 40 per cent. Both GfK and TNS invest in the creation and development of syndicated services that provide clients with market measurement across key industry sectors and have successfully developed longer-term relationships with clients by creating continuous tracking services. These services are an important way of developing relationships with key accounts and of allowing for the provision of additional value-added services.

GfK and TNS have a range of syndicated services with a complementary fit, notably in the areas of consumer panels and media measurement. Recently, TNS has extended its media services into new fast growing digital areas. It has further developed its digital TV audience measurement services, especially in the US, and built capabilities that provide clients with greater understanding into what consumers are saying and doing online and how this impacts their purchasing behaviour, both online and offline. Recently, GfK developed a tool used to produce and analyse media usage data. Initially designed for TV research, it has since been expanded to include, radio, print, posters, online and cross-media. GfK's retail audit business, Retail and Technology, is a syndicated service with unique data warehouse solutions worldwide.

The Management Board of GfK and the TNS Directors believe that clients will benefit from the extended geographic coverage offered by the combined businesses and that the Merger will offer increased opportunities to further develop syndicated and continuous services into new sectors.

7.3     The world's most extensive custom research network

GfK and TNS have invested significantly in expanding their global networks and the Enlarged Group will have operations in all the significant markets worldwide. Both companies have core strengths in Western Europe and the US. Beyond that, GfK's leading position in the developing markets of Central and Eastern Europe complements TNS' excellent coverage of the fast-growing Asian markets, including the significant opportunities TNS has through its strong position in China. Both GfK and TNS have operations in the important emerging Brazilian market and, together, have a strong presence across the rest of the Latin American region. The Enlarged Group will have a leading position in all the major geographic markets.

7.4    Specific sector expertise

GfK and TNS have been developing a significant presence in all the main industry sectors, in order to provide clients with a depth of expertise in their industries. The Enlarged Group will be one of the leaders in the largest or most rapidly growing sectors of the market information industry, for example FMCG, Media, Technology, Healthcare, Financial Services and Automotive, providing clients with more specialist industry knowledge and insight.

7.5    Increased emphasis on global accounts and client service

GfK and TNS recognise that major multi-nationals are looking to use fewer suppliers of market information. They have, therefore, been developing relationships with these multi-national accounts, to provide them with a dedicated offering able to provide an appropriate level of service. GfK and TNS also recognise that clients are increasingly looking for delivery of actionable insights rather than simply receiving increased volumes of data. Such insights are designed to improve the effectiveness of clients' marketing programmes. The skills required to meet the demand for insight and analysis differ from those of providing more basic data collection and production.

The Management Board of GfK and the TNS Directors believe the combination of GfK and TNS would allow for further focus on the development of multi-national accounts, as well as widening the range of skills and services available to these clients.

7.6    Industry-leading research expertise

Both GfK and TNS have been building on their leading range of products and services in key areas of research expertise, such as: Stakeholder Management, Brand & Communications and Product Development & Innovation. TNS has also been building a strong practice in the area of Retail & Shopper. The Management Board of GfK and the TNS Directors believe that GfK's strong position in the Retail and Technology sector will provide significant opportunities to develop services that complement TNS' position in the area of Retail & Shopper. With these products and services available to the Enlarged Group, the Management Board of GfK and the TNS Directors believe that it will be well positioned to provide clients with the innovative solutions they require to respond to the marketing challenges they face in fast-changing markets.

8.      The GfK-TNS Board

GfK-TNS will be led by a board of directors drawn from both GfK and TNS. The GfK-TNS Board will include a strong and experienced executive management team complemented by non-executive directors, five of whom will be independent directors.  For so long as GfK-Nürnberg e.V. owns or controls at least 15 per cent. of the shares of GfK-TNS, it will have the right to appoint one non-executive director to the GfK-TNS Board. It is intended that the initial appointee will be Prof. Dr. Klaus Wübbenhorst and that Prof. Dr. Klaus Wübbenhorst will also become a member of the Chair of GfK-Nürnberg e.V.  The GfK-TNS Board will be chaired, as a non-executive Chairman, by Hajo Riesenbeck, currently Chairman of the Supervisory Board of GfK. The Chairman will have a casting vote on board resolutions where there would otherwise be an equality of votes.

The proposed GfK-TNS Board will comprise:

Name
GfK-TNS Board position
Current position
Hajo Riesenbeck
Chairman
Chairman of the Supervisory Board of GfK; President of the Chair of GfK-Nürnberg e.V.
David Lowden
Chief Executive
Chief Executive of TNS
Christian Weller von Ahlefeld
Finance Director
Chief Financial Officer of GfK
Petra Heinlein
Executive Director
Member of the Management Board of GfK
Dr. Gérard Hermet
Executive Director
Member of the Management Board of GfK
Pedro Ros
Executive Director
Executive Director of TNS
Donald Brydon CBE
Non-Executive Director and Senior Independent Director
Chairman of TNS
Dr. Wolfgang Berndt
Non-Executive Director
Member of the Supervisory Board of GfK
Drummond Hall
Non-Executive Director
Non-Executive Director of TNS
Dr. Arno Mahlert
Non-Executive Director
Member of the Supervisory Board of GfK
Paul Murray
Non-Executive Director
Non-Executive Director of TNS
 
Alice Perkins CB
Non-Executive Director
Non-Executive Director of TNS
Prof. Dr. Klaus Wübbenhorst
Non-Executive Director (appointed by GfK-Nürnberg e.V.)
Chief Executive of GfK
 
 
 

In addition, there will be one further independent non-executive director appointed to the GfK-TNS Board, to be selected by TNS.

9.      Summary of the key terms of the Merger

Pursuant to the Merger, which will be subject to the conditions and the full terms and conditions to be set out in the Offer Document and summarised in the Prospectus, GfK Shareholders will be entitled to receive 11.74 New TNS Shares for each GfK Share.  

Immediately following completion of the Merger, assuming full acceptance of the Offer by GfK Shareholders and therefore that the maximum number of New TNS Shares to be issued pursuant to the Merger are issued at that time, TNS Shareholders will own approximately 50 per cent., and GfK Shareholders will own approximately 50 per cent., of GfK-TNS' enlarged issued share capital (with GfK-Nürnberg e.V., GfK's largest shareholder, owning approximately 28.7 per cent. of GfK-TNS' enlarged issued share capital based on currently issued and outstanding shares).

GfK and TNS have entered into a Merger Agreement, which sets out their respective obligations governing implementation of the Merger. In addition, TNS and GfK-Nürnberg e.V. have agreed the terms of a Relationship Agreement which will regulate the relationship between TNS and GfK-Nürnberg e.V. (as a shareholder in TNS) following completion of the Merger. This agreement sets out, amongst other things, certain governance arrangements in relation to GfK-TNS. These agreements are summarised in Appendix B.

Other key terms of the Merger: 

·                   TNS will be re-named GfK-TNS plc;
·                   GfK-TNS will have its primary listing in London, with a secondary listing on the Frankfurt Stock Exchange;
·                   GfK-TNS will have a board of directors drawn from both GfK and TNS. It will include a strong and experienced executive management team complemented by non-executive directors, five of whom will be independent directors (see section 8 of this announcement for further details);
·                    for so long as GfK-Nürnberg e.V. owns or controls at least 15 per cent. of the shares of GfK-TNS, it will have the right to appoint one non-executive director to the GfK-TNS Board;
·                    the global head office of the Enlarged Group will be based in London, with a German head office in Nürnberg with significant business operations. Further, by GfK-TNS using its best efforts on a commercial basis, a central head office function of GfK-TNS will be maintained in Nürnberg. The GfK-TNS Board will hold at least one board meeting per year in Nürnberg;
·                    under the terms of the Merger Agreement, GfK and TNS have each undertaken to pay the other a break fee in the event of certain circumstances occurring (see Appendix B for further details);
·                    the terms of the Relationship Agreement and the GfK-TNS Articles will contain provisions, enforceable by GfK-Nürnberg e.V., to (i) retain the head office of the Enlarged Group’s German operations in Nürnberg; (ii) use its best efforts, on a commercial basis, to maintain a central head office function of GfK-TNS in Nürnberg; (iii) preserve and promote the “GfK” name and brand identity at the holding company level and in Germany, except that the TNS brand name may continue to be used in Germany where the GfK-TNS Board determines that it is commercially advantageous to do so; (iv) maintain market research and information services as a core activity of the Enlarged Group; and (v) preserve and promote significant business operations in Nürnberg. Such provisions are also contained in the GfK-TNS articles.
·                     GfK-TNS intends to enter, either directly or through a subsidiary, into a domination and/or profit and loss transfer agreement (Beherrschungs- und/oder Ergebnisabführungsvertrag) pursuant to sections 291 et seq. of the German Stock Corporation Act (Aktiengesetz) with GfK as controlled company if, following Completion or at any time thereafter, GfK-TNS controls a qualified majority of at least 75 per cent. in the general meeting of GfK. GfK-TNS and GfK could enter into either a domination or profit and loss transfer agreement or a combined domination and profit and loss transfer agreement. A domination agreement would entitle GfK-TNS to give binding instructions to the Management Board of GfK. Under a profit and loss transfer agreement, GfK would be obliged to transfer its entire profits to GfK-TNS. In both cases GfK-TNS would have to compensate GfK for any annual loss that would otherwise arise during the term of such agreement. If a domination and/or profit and loss transfer agreement is entered into following Completion, the remaining minority GfK Shareholders would have the right to either (i) receive an annual compensation payment for the share of the profits to which they would otherwise be entitled to, or (ii) sell their GfK shares to GfK-TNS for a reasonable consideration. Both the annual compensation payment and the consideration in case a GfK Shareholder decides to tender its GfK Shares would be set forth in the domination and/or profit and loss transfer agreement. The consideration for tendered GfK shares would be expected to consist of shares in GfK-TNS. This consideration could correspond to the consideration under the Offer, but could also exceed or fall short of the Offer consideration.

The New TNS Shares will be issued credited as fully paid and will rank pari passu in all respects with the TNS Shares in issue at the time the New TNS Shares are issued pursuant to the Merger, including the right to receive and retain all dividends and other distributions declared, made or paid by reference to a record date falling after the Completion Date. Both GfK and TNS have agreed that neither of them will declare or pay any dividend (other than those already declared) with a record date prior to the Completion Date, unless the other has declared or paid a dividend of an equivalent amount with the same record date.

Applications will be made to the UKLA for the entire issued share capital of TNS to be admitted to the Official List and to the London Stock Exchange for the New TNS Shares to be admitted to trading on the London Stock Exchange's main market for listed securities. Furthermore, applications will be made for the admission of the entire share capital of TNS (including the New TNS Shares) to trading on the regulated market segment (Regulierter Markt) of the Frankfurt Stock Exchange (secondary listing).  

10.     Implementation of, and Conditions to, the Merger

The Merger is being implemented by way of the Offer, being an offer to GfK Shareholders to acquire their GfK Shares in consideration for the issue of New TNS Shares.

The Merger will only be implemented if:

·                     GfK-Nürnberg e.V. Advisory Board passes a resolution approving the irrevocable undertaking to be given by GfK-Nürnberg e.V. in respect of the Merger;
·                     GfK-Nürnberg e.V. General Assembly passes a resolution approving the irrevocable undertaking to be given by GfK-Nürnberg e.V. in respect of the Merger; and
·                     the TNS General Meeting passes the Resolutions and the Waiver is granted by the Panel (and is not withdrawn).

TNS will only make the Offer if resolutions approving the irrevocable undertaking have been duly passed at the relevant GfK-Nürnberg e.V. Advisory Board meeting and GfK-Nürnberg e.V. General Assembly and if the Resolutions have been duly passed at the TNS General Meeting. If the resolutions approving the irrevocable are not passed at the relevant GfK-Nürnberg e.V. Advisory Board meeting or the GfK-Nürnberg e.V. General Assembly or if the Resolutions are not passed at the TNS General Meeting, the Offer Document will not be published, the Offer will not proceed and the Merger will automatically lapse. If the Offer proceeds, the Offer Document setting out details of the Offer and the procedures to be followed to accept the Offer, together with the Prospectus relating to the Merger and the Enlarged Group, will be published and made available (other than to certain Overseas Shareholders) shortly after the Resolutions are passed.  

The Offer is also conditional upon, among other matters, the satisfaction or waiver of the following Conditions:

·                     acceptances of the Offer being received in respect of at least 75 per cent. of the then current issued share capital of GfK;
·                     relevant anti-trust approvals, including approvals in the European Union and the United States;
·                     there being no Material Adverse Change Events in relation to GfK, as described in Appendix B; and
·                     Admission.

11.     Management and Employees

Great importance is attached to the skills and expertise of the management and employees of GfK and TNS and the Management Board of GfK and the TNS Board believe that the increased size and strength of the Enlarged Group will offer attractive career prospects and that the future growth of the Enlarged Group will provide greater future employment opportunities for employees. However, both TNS and GfK recognise that in order to achieve the planned benefits of the Merger some operational restructuring may be required following Completion. In the event that such restructuring entails reductions in staffing, any compulsory redundancies will be minimised through re-deployment and normal staff turnover. In any event, the employment rights of any staff affected would be respected in full.  

12.     Dividend Policy

The TNS Board's existing policy on dividends is to increase returns to TNS Shareholders progressively, reflecting the underlying business performance of the TNS Group and balancing investor expectations with the capital demands required to promote its organic growth strategy. The GfK-TNS Board intends to maintain this progressive dividend policy for GfK-TNS following Completion of the Merger.

13.     Current Trading and Prospects

13.1   Current Trading of TNS

Based on TNS' internal management accounts, in the first quarter of 2008 TNS achieved underlying revenue growth of over 5 per cent. In addition, on average exchange rates, the Euro has strengthened by over 10 per cent. in the first quarter compared with 2007. Over 50 per cent. of TNS' profits are denominated in Euros, so this is expected to have a material effect on reported results for 2008.

The prospects for the rest of 2008 are positive, with the order book at the end of April 2008 significantly ahead of the previous year.

13.2   Current Trading of GfK

The GfK Group achieved sales growth of 5.1 per cent. in the first quarter of 2008. At the same time, the increase in operating income, EBIT and consolidated income was significant in the first quarter of 2008 compared with the same period in the prior year; growth in adjusted operating income was more moderate than in 2007, but in line with the trend for financial year 2006. GfK achieved significant double-digit growth in organic terms in Central and Eastern Europe, Latin America as well as Asia and the Pacific.

At the end of April 2008, the GfK Group's order books were excellent and significantly ahead of the prior year.

13.3   Prospects of the Enlarged Group

The GfK-TNS Directors are confident about the prospects post-Completion for GfK-TNS for the current financial year.

14.     Irrevocable Undertakings

TNS has received irrevocable undertakings to accept the Offer from those members of the Management and Supervisory Boards of GfK who hold GfK Shares in respect of a total of 379,249 GfK Shares representing in aggregate approximately 1.1 per cent. of the existing issued share capital of GfK. TNS has also received an undertaking to accept the Offer from GfK-Nürnberg e.V. in respect of a total of 20,371,844 GfK Shares, representing approximately 56.8 per cent. of the existing issued share capital of GfK.  

Accordingly, TNS has received undertakings to accept the Offer in respect of, in aggregate, 20,751,093 GfK Shares, representing approximately 57.9 per cent. of the existing issued share capital of GfK.

Further details of these irrevocable undertakings are set out in Appendix A and Appendix B.

15.     New Financing Facilities

The Enlarged Group has arranged to have new financing facilities which will be available to it immediately upon Completion of the Merger. The new facilities, which total €1,100,000,000, are fully underwritten and will refinance the existing bank indebtedness of TNS and GfK at Completion and provide ongoing working capital and corporate finance for the Enlarged Group.

16.     GfK-Nürnberg e.V. and Rule 9 Waiver

GfK-Nürnberg e.V. is the largest shareholder in GfK, holding 20,371,844 GfK Shares, which represents approximately 56.8 per cent. of GfK's existing issued share capital. GfK-Nürnberg e.V. is a not-for-profit association whose purposes include the conduct of market, sales and consumer research and the analysis of that research for educational and practical purposes.  

As referred to above, GfK-Nürnberg e.V. has given an irrevocable undertaking, subject (inter alia) to the approval of the GfK-Nürnberg e.V. Advisory Board and the GfK-Nürnberg e.V. Members and certain other conditions, to accept the Offer in respect of its entire holding of GfK Shares. This irrevocable undertaking is summarised in further detail in Appendix A and Appendix B.

Following the Merger, depending on the level of acceptances, it is possible that GfK-Nürnberg e.V., together with persons acting in concert with GfK-Nürnberg e.V., may have an economic and voting interest in TNS of more than 30 per cent. Under Rule 9 of the City Code, any person who acquires an "interest" (as defined in the City Code) in shares which, taken together with shares in which such person is already interested and in which any persons "acting in concert" (as defined in the City Code) with such person are interested, carry 30 per cent. or more of the voting rights of a company such as TNS that is subject to the City Code is normally required to make a general offer to all remaining shareholders to acquire their shares. Such a general offer is also required where any person, having an interest (together with persons acting in concert with him) of not less than 30 per cent. (but not more than 50 per cent.) of the voting rights of such a company, acquires (or any person acting in concert with him acquires) an interest in any other shares which increases the percentage of shares carrying voting rights in which he is interested

For the purposes of the City Code, the following are persons acting in concert with GfK-Nürnberg e.V. in connection with the Merger: (i) GfK (as a company in which GfK-Nürnberg e.V. has a 56.8 per cent. interest); (ii) the members of the Chair of GfK-Nürnberg e.V. (Hajo Riesenbeck, Prof. Dr. Hermann Diller and Dr. Raimund Wildner); (iii) the honorary presidents of GfK-Nürnberg e.V. (Helga Haub and Peter Zühlsdorff); (iv) Professor Dr. Klaus Wübbenhorst (as the proposed appointee of GfK-Nürnberg e.V. to the board of GfK-TNS); and (v) Rothschild (as financial adviser to GfK).

If GfK-Nürnberg e.V.'s GfK Shares, (and those of persons acting in concert with GfK-Nürnberg e.V.), are accepted to the Offer and the Merger otherwise becomes effective, GfK-Nürnberg e.V. and persons acting in concert with GfK-Nürnberg e.V. will receive 243,123,002 TNS Shares under the terms of the Merger. Assuming 100 per cent. acceptance of the Offer and the maximum number of TNS Shares therefore being issued under the terms of the Merger, these shares will represent approximately 29.2 per cent. of the issued and outstanding share capital of GfK-TNS immediately following Completion.

However, if the Offer becomes effective with total acceptances in respect of only 75 per cent. of GfK's issued share capital (the minimum acceptance level under the terms of the Offer), the 243,123,002 TNS Shares issued to GfK-Nürnberg e.V. and persons acting in concert with GfK-Nürnberg e.V. will represent 33.4 per cent. of the issued share capital of GfK-TNS immediately following Completion and this percentage holding would increase correspondingly if the minimum acceptance level was waived and the Offer became effective with total acceptances in respect of fewer than 75 per cent. of GfK's issued share capital.

Also, under Rule 37 of the City Code, any increase in the percentage holding of a shareholder which results from a company buying back its own shares will also be treated as an acquisition for the purposes of Rule 9 of the City Code. This means that a buy back of TNS Shares pursuant to the authority obtained at its annual general meeting on 7 May 2008 could, unless GfK-Nürnberg e.V. and/or persons acting in concert with GfK-Nürnberg e.V. participate in the buy back to an extent such that it maintains or reduces their total shareholding level as a proportion of the total issued share capital of TNS, result in GfK-Nürnberg e.V. or persons acting in concert with GfK-Nürnberg e.V. being obliged to make an offer for TNS.

Furthermore, following the Merger, certain of the persons acting in concert with GfK-Nürnberg e.V. are expected to be issued with share awards, options or other rights to subscribe for shares carrying voting rights in TNS as part of a share scheme or incentive plan operated by TNS in respect of its officers and management. Those awards and/or the exercise of any options or subscription rights would, under the City Code, be considered to be an acquisition of an interest in shares for the purposes of Rule 9 and so may increase the economic and voting interest in TNS of GfK-Nürnberg e.V. and persons potentially acting in concert with GfK-Nürnberg e.V. to 30 per cent. or more or, if such economic and voting interest in TNS is already 30 per cent. or more, would increase the percentage of shares carrying voting rights in which GfK-Nürnberg e.V. and persons potentially acting in concert with GfK-Nürnberg e.V. are interested.

The Panel is expected to agree, however, subject to the approval of the TNS independent shareholders on a poll at the TNS General Meeting, to waive any obligation for GfK-Nürnberg e.V. or any person acting in concert with GfK-Nürnberg e.V. to make a general offer for TNS which would otherwise arise as a result of (i) the Merger; (ii) any repurchase by TNS of its own shares; or (iii) the making of any share awards to, or any issue, grant or exercise of any options, awards or other conversion or subscription rights in respect of TNS Shares by, or to, any person acting in concert with GfK-Nürnberg e.V.

17.     Changes to the TNS Articles of Association

The Merger is conditional upon the passing of the Resolutions, which include resolutions to amend TNS' articles of association. The proposed changes are designed principally to preserve certain rights and interests of GfK-Nürnberg e.V.  

In summary, the proposed changes provide that, for so long as GfK-Nürnberg e.V. owns or controls TNS Shares carrying not less than 15 per cent. of the voting rights exercisable at TNS general meetings: 

·                    GfK-Nürnberg e.V. will be entitled to appoint one non-executive director to the GfK-TNS Board (the “GfK-Nürnberg e.V. Director”) in accordance with the following procedure: first, GfK-Nürnberg e.V. may nominate a person for appointment to the board; that appointment will become effective unless the board resolves within 14 days, acting reasonably and in good faith, to reject it; if it does so reject it, GfK-Nürnberg e.V. may nominate a second person; if that nomination is also rejected on the same basis, GfK-Nürnberg e.V. may nominate a third person, who will be automatically appointed a director;
·                    a core activity of the Enlarged Group will be market research and information services;
·                    TNS will preserve and promote the Enlarged Group’s significant business operations in Nürnberg, and retain the head office of its German operations in Nürnberg;
·                    provided GfK-TNS is entitled to use the “GfK” name and brand, TNS will preserve and promote the “GfK” name, brand and brand identity at the top company level and in Germany (except that the “TNS” brand name may continue to be used in Germany where commercially advantageous to do so); and
·                     any resolution to vary or adversely alter the above rights will require the consent of, or on behalf of, GfK-Nürnberg e.V.

 

The proposed changes also include amendments to the articles to ensure that the director appointed by GfK-Nürnberg e.V. is not required to retire by rotation under the articles. 

Since a resolution was passed at TNS' annual general meeting in May 2008 to adopt new articles of association but only with effect from 1 October 2008, and as there is the possibility that the Merger will become effective before that date, in order to ensure the above changes are effective at all times following Completion (whenever Completion occurs), it is necessary to make the relevant changes outlined above (with appropriate variations to the extent necessary) to both TNS' existing articles of association and the new articles which will come into force on 1 October this year. The Resolutions therefore will include proposed amendments to both sets of articles of association.

18.     Interests and dealings information of GfK-Nürnberg e.V. and its concert parties in TNS

Neither GfK-Nürnberg e.V. nor the members of the Chair of GfK-Nürnberg e.V. (nor persons whose interests in relevant securities the member of the Chair of GfK-Nürnberg e.V. is taken to be interested by Part 22 of the Companies Act 2006) nor any persons acting in concert with GfK-Nürnberg e.V.:

·                     have any interests in, or rights to subscribe for, any relevant securities in TNS;
·                     have dealt in any relevant securities of TNS during the period beginning 12 months prior to the date of this document to the date of this document;
·                     have borrowed or lent any securities in TNS;
·                     have any short positions (whether conditional or absolute and whether in the money or otherwise), including any short position under a derivative, in any securities in TNS;
·                     have any agreement to sell or any delivery obligation or right to require another person to purchase or take delivery of any securities in TNS.
Other than as disclosed in this document, neither GfK-Nürnberg e.V. nor the members of the Chair of GfK-Nürnberg e.V. nor any persons acting in concert with GfK-Nürnberg e.V. has any arrangement of the kind referred to in Note 6 on Rule 8 of the City Code in relation to relevant securities of TNS.

19.     Further Information

A presentation for analysts and investors will be made today at 9:00am UK time (10.00am German time). The presentation will be webcast live and the webcast archive will be available afterwards for replay. The webcasts can be accessed via www.gfktns-merger.com.  Remote participants can listen to the presentation and take part in the live Q&A session by joining via one of the following conference call numbers:

International access number:    +44 20 8609 0581

UK toll free number:               0800 358 1448

German toll free number:         0800 180 2225

A Circular and Prospectus will be despatched to the TNS Shareholders in due course. The Offer Document and related documentation will be published for GfK Shareholders in due course.


Further detail is set out in the Appendices.


Terms used in this announcement but not defined herein shall have the meanings given to them in Appendix G 


  Enquiries:




GfK

Prof. Dr. Klaus Wübbenhorst, Chief Executive

Bernhard Wolf, Global Head of Corporate Communications

Tel: +49 911 395 0

Tel: +49 911 395 2733

Tel: +49 911 395 2012



Rothschild

(Financial Adviser to GfK) 

Jonathan Paine, Frank Herzog, Adam Greenblatt

Tel: +44 20 7280 5000



Hering Schuppener Consulting

(Public Relations Adviser to GfK) 

Alexander Geiser

Tel: +49 69 92 18740



TNS

David Lowden, Chief Executive

Janis Parks, Head of Investor Relations

Tel: +44 20 8967 0007



Deutsche Bank

(Lead Financial Adviser and Joint Broker to TNS)

Kristian Bagger, Gavin Deane, Manny Chohhan

Charles Wilkinson, Martin Pengelley (corporate broking)

Tel: +44 20 7545 8000



JPMorgan Cazenove

(Financial Adviser and Joint Broker to TNS)

Malcolm Moir, Andrew Hodgkin, Hugo Baring

Tel: +44 20 7588 2828



Brunswick

(Public Relations Adviser to TNS) 

UK - David Yelland, Jonathan Glass 

Germany - Christine Graeff



Tel: +44 20 7404 5959

Tel: +49 69 24 00 55 12


  The New TNS Shares have not been, and will not be, registered with the SEC under the Securities Act or under the laws of any state, district or jurisdiction of the United States. This announcement does not constitute an offer to sell or solicitation of an offer to buy securities in the United States. Securities may not be offered, sold or delivered, directly or indirectly, in the United States absent registration or an exemption from registration under the Securities Act. There will be no public offer of securities in the United States.


This announcement should not be sent, directly or indirectly, in or into, or by use of mails or any means or instrumentality (including, without limitation, facsimile transmission, telephone and internet) of interstate or foreign commerce of, or any facilities of a national securities exchange of, the United States.


This announcement does not constitute an offer to purchase, sell or exchange or the solicitation of an offer to purchase, sell or exchange any securities or the solicitation of any vote or approval in any jurisdiction pursuant to the Merger or otherwise, nor shall there be any purchase, sale or exchange of securities or such solicitation in any jurisdiction in which such offer, solicitation, sale or exchange would be unlawful prior to the registration or qualification under the laws of such jurisdiction.


The laws of the relevant jurisdictions may affect the availability of the Offer to persons not resident in Germany. Persons who are not resident in Germany, or who are subject to the laws of any jurisdiction other than Germany, should inform themselves about, and observe, any applicable requirements. 


The New TNS Shares to be issued in connection with the Merger have not been, and will not be, registered under or offered in compliance with applicable securities laws of any state, province, territory or jurisdiction of Canada, Australia or Japan and no regulatory clearances in respect of the New TNS Shares have been, or will be, applied for in any jurisdictions other than the UK and Germany. Accordingly, unless an exemption under the relevant securities laws is applicable, the New TNS Shares are not being, and may not be, offered, sold, resold, delivered or distributed, directly or indirectly, in or into, Canada, Australia or Japan or to, or for the account or benefit of, any person resident in Canada, Australia or Japan.


The Merger benefits and related non-recurring costs to achieve the Merger benefits referred to in this announcement have been calculated on the basis of the existing cost and operating structures of the companies and by reference to current prices and the current regulatory environment. These statements relate to future actions and circumstances which, by their nature, involve risks, uncertainties and other factors. Because of this, the cost reductions referred to may not be achieved, or those achieved could be materially different from those expected. These statements should not be interpreted to mean that the earnings per share in the first full financial year following Completion, or in any subsequent period, would necessarily match or be greater than those for the relevant preceding financial period. Further details are set out in the Merger Benefits Reports contained in Appendices D to E inclusive.


This announcement does not constitute a prospectus or prospectus equivalent document. Holders of shares in TNS and GfK are advised to read carefully the formal documentation in relation to the Merger once it has been despatched.


Deutsche Bank AG is authorised under German Banking Law (competent authority: BaFin - Federal Financial Supervisory Authority) and regulated by the Financial Services Authority for the conduct of UK business. Deutsche Bank AG is acting as lead financial adviser and joint corporate broker to TNS, and no-one else, in connection with the Merger and will not be responsible to anyone other than TNS for providing the protections afforded to the clients of Deutsche Bank AG nor for providing advice in relation to the Merger or any matter referred to herein.


JPMorgan Cazenove, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting as financial adviser and joint corporate broker to TNS, and no-one else, in connection with the Merger and will not be responsible to anyone other than TNS for providing the protections afforded to the clients of JPMorgan Cazenove nor for providing advice in relation to the Merger or any matter referred to herein.


Rothschild, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively as financial adviser to GfK in connection with the Merger and no-one else and will not be responsible to anyone other than GfK for providing the protections afforded to clients of Rothschild or for providing advice in relation to the Merger, the content of this announcement or any matter referred to herein.


UBS is authorised under German Banking Law (competent authority: BaFin - Federal Financial Supervisory Authority) and is acting exclusively as fairness opinion adviser to GfK in connection with the Merger and no-one else and will not be responsible to anyone other than GfK for providing the protections afforded to clients of UBS or for providing advice in relation to the Merger, the content of this announcement or any matter referred to herein.


Deutsche Bank, JPMorgan Cazenove, Rothschild and UBS make no representations, express or implied, with respect to the accuracy or completeness of any information contained in this document and accept no responsibility or liability for, nor to they authorise, the contents of this document (or its issue), or for any other statement made or purported to be made by them (or any of them), or on their behalf, in connection with TNS, GfK, GfK-Nürnberg e.V., the TNS Shares, the GfK Shares or the Merger.


Forward looking statements


Certain statements contained in this announcement, constitute "forward-looking statements". In some cases, these forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "prepares", "anticipates", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology. Investors should specifically consider the factors identified in, or incorporated by reference into, this document which could cause actual results to differ before making an investment decision. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of TNS, GfK and/or of the Enlarged Group, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding TNS', GfK's and/or the Enlarged Group's present and future business strategies and the environment in which the TNS, GfK and/or the Enlarged Group will operate in the future. Such risks, uncertainties and other factors are set out more fully in the Prospectus and the other formal offer documentation relating to the Merger and include, among others: risks relating to the market insight and research consulting market in general and challenges in integrating the businesses of the TNS Group and the GfK Group. These forward-looking statements speak only as at the date of this announcement. Except as required by the FSA, the London Stock Exchange, the Listing Rules or any other applicable law, TNS and GfK expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained in this document to reflect any change in their expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.


Dealing Disclosure Requirements


Under the provisions of Rule 8.3 of the City Code, if any person is, or becomes, "interested" (directly or indirectly) in one per cent. or more of any class of "relevant securities" of TNS, all "dealings" in any "relevant securities" of TNS (including by means of an option in respect of, or a derivative referenced to, any such "relevant securities") must be publicly disclosed by no later than 3.30pm (London time) on the London business day following the date of the relevant transaction. This requirement will continue until the offer becomes, or is declared, unconditional as to acceptances, lapses or is otherwise withdrawn or on which the "offer period" otherwise ends. If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire an "interest" in "relevant securities" of TNS, they will be deemed to be a single person for the purposes of Rule 8.3 of the City Code.


Under the provisions of Rule 8.1 of the City Code, all "dealings" in "relevant securities" of TNS by GfK-Nürnberg e.V. or TNS, or by any of their respective "associates", must be disclosed by no later than 12.00 noon (London time) on the London business day following the date of the relevant transaction.


A disclosure table, giving details of the companies in whose "relevant securities" "dealings" should be disclosed, and the number of such securities in issue, can be found on the Panel's website at www.thetakeoverpanel.org.uk.


"Interests in securities" arise, in summary, when a person has long economic exposure, whether conditional or absolute, to changes in the price of securities. In particular, a person will be treated as having an "interest" by virtue of the ownership or control of securities, or by virtue of any option in respect of, or derivative referenced to, securities.


Terms in quotation marks are defined in the City Code, which can also be found on the Panel's website. If you are in any doubt as to whether or not you are required to disclose a "dealing" under Rule 8 of the City Code, you should consult the Panel.


Appendix A
irrevocable undertakings


1.      Management Board and Supervisory Board of GfK

The following members of the Management Board of GfK and the Supervisory Board of GfK have given irrevocable undertakings to accept the Offer, in respect of a total of 379,249 GfK Shares, representing in aggregate approximately 1.1 per cent., of the existing issued share capital of GfK. The percentage of enlarged share capital of GfK-TNS in the table below is calculated on the basis of 100 per cent. acceptances of the Offer by GfK Shareholders.



As at 2 June 2008


Interests immediately following Admission

Members of the Management Board of GfK or the Supervisory Board of GfK 


Number of GfK Shares


Percentage of issued share capital of GfK*


Number of GfK-TNS Shares


Percentage of enlarged share capital of GfK-TNS*

Petra Heinlein    


41,736


0.1%


489,980


0.1%

Dr. Gérard Hermet    


91,551


0.3%


1,074,808


0.1%

Wilhelm Wessels    


40,000


0.1%


469,600


0.1%

Christian Weller von Ahlefeld    


1,500


0%


17,610


0%

Professor Dr. Klaus Wübbenhorst    


201,000


0.6%


2,359,740


0.3%

Dr. Christoph Achenbach    


1,061


0%


12,456


0%

Dr. Wolfgang Berndt    


2,400


0%


28,176


0%

Dieter Wilbois    


1


0%


11


0%

Total    


379,249


1.1%


4,452,381


0.5%

* Percentages are to the nearest tenth of a percentage point.

2.      GfK-Nürnberg e.V.

TNS has received an undertaking to accept the Offer from GfK-Nürnberg e.V. in respect of a total of 20,371,844 GfK Shares, representing approximately 56.8 per cent. of the existing issued share capital of GfK, subject to the approval of the GfK-Nürnberg e.V. Advisory Board and the members of GfK-Nürnberg e.V. at its General Assembly.


Accordingly, TNS has received undertakings to accept the Offer in respect of, in aggregate, 20,751,093 GfK Shares, representing approximately 57.9 per cent. of the existing issued share capital of GfK.


Further detail on these irrevocable undertakings is set out in Appendix B.


Appendix B
key arrangements

1.      Merger Agreement

TNS and GfK entered into the Merger Agreement on 3 June 2008.

Pursuant to the Merger Agreement, TNS has agreed, subject to the offer conditions, to make the Offer to acquire GfK. The Offer will be made on the basis of 11.74 TNS Shares for each GfK Share. 

Under the terms of the Merger Agreement:

·           TNS will be re-named GfK-TNS plc;
·           GfK-TNS will have its primary listing in London with a secondary listing on the Frankfurt Stock Exchange; and
·           GfK-TNS will have a board of directors drawn from both TNS and GfK, complemented by non-executive directors, five of whom will be independent directors (see section 8 of this announcement for further details). The GfK-TNS Board will hold at least one board meeting per annum in Nürnberg.  

TNS will only make the Offer if the resolutions approving the irrevocable undertaking have been duly passed at the relevant GfK-Nürnberg e.V. Advisory Board meeting and GfK-Nürnberg e.V. General Assembly and if the Resolutions have been duly passed at the TNS General Meeting. If the resolutions approving the irrevocable are not passed at the relevant GfK-Nürnberg e.V. Advisory Board meeting or GfK-Nürnberg e.V. General Assembly or the Resolutions are not passed at the TNS General Meeting (or prior to posting the Offer Document any of the conditions to the Offer become incapable of being satisfied and is not waived, where capable of waiver), TNS will apply to BaFin to be excused from making the Offer (and posting the Offer Document) and the Merger will lapse. 

1.1      Principal obligations of TNS and GfK under the Merger Agreement

The principal obligations of TNS under the Merger Agreement are as follows:

·          to prepare and publish the Circular and the Prospectus and send them to TNS Shareholders as soon reasonably practicable;
·           to prepare and publish the Offer Document and post it to GfK Shareholders;
·           to procure that the directors of TNS recommend the Merger to the TNS Shareholders and do not adversely modify that recommendation (except that such obligation shall not apply if compliance with it would be contrary to the directors’ fiduciary duties);
·           to arrange for new financing facilities to be in place at completion of the Offer to replace the existing facilities of GfK;
·           to (i) retain the head office of the Enlarged Group’s German operations in Nürnberg (with the global head office of the Enlarged Group being in London); (ii) have at least one meeting of the GfK-TNS Board in Nürnberg each year, but otherwise hold meetings of the GfK-TNS Board alternatively in London, Nürnberg or other cities elsewhere in the world where the Enlarged Group carries out significant operations; (iii) preserve and promote the “GfK” name and brand identity in Germany and at top company level, although the “TNS” name shall be retained where commercially advantageous in Germany; (iv) maintain market research and information services as a core activity of the Enlarged Group; (v) preserve and promote significant business operations of the Enlarged Group in Nürnberg; (vi) by TNS using its best efforts on a commercial basis, maintain a central head office function of the Enlarged Group in Nürnberg; (vii) adopt and maintain the GfK orange colour as the Enlarged Group’s corporate identity colour; and (viii) change the name of TNS to “GfK-TNS plc” (each of the above obligations being, where relevant, subject to TNS being entitled to use the relevant names and trade marks); and
·          to pay a break fee to GfK of £10,623,000 in certain circumstances (see paragraph 1.3 of this Appendix B for further details).

The principal obligations of GfK under the Merger Agreement are as follows:
·           to assist with the preparation of the Circular, Prospectus and Offer Document;
·           to procure that all loans between GfK-Nürnberg e.V. and GfK are repaid;
·           to procure that the GfK trade name and trade mark are licensed to GfK by GfK-Nürnberg e.V. and that TNS is given the sub-licence necessary to comply with the agreed approach to corporate identity and branding;
·           to procure that the Management Board of GfK recommends the Offer and does not adversely modify that recommendation (except that such obligation shall not apply if compliance with it would be contrary to the fiduciary duties of the members of the Management Board of GfK);
·          to pay a break fee to TNS of £10,623,000 in certain circumstances (see paragraph 1.3 of this Appendix B for further details).
 

GfK and TNS have also agreed:

·           not to solicit or enter into certain large or competing transactions or issue further options or shares (other than under existing schemes) or declare and/or pay dividends (other than those already declared) having a record date prior to Completion unless the other party declares and/or pays a dividend of the same amount with the same record date, in each case without the approval of the other party;
·           that appropriate merger control filings will be made (and that each will dispose of businesses and assets pursuant to directions from anti-trust government agencies in order for the merger to proceed provided that, unless they agree otherwise, such disposals would not have an material adverse effect on the financial position or prospects of the Enlarged Group); and
·           to co-operate to establish new option and incentive plans suitable for the Enlarged Group as regards incentivisation and retention of key staff and into which rights under existing plans can be transferred.

1.2      Termination 

The Merger Agreement may be terminated by written notice by TNS if:

·          any resolution is passed by shareholders of GfK to approve a competing offer for all or a significant proportion of the GfK Shares or GfK’s business or any such competing offer becomes unconditional as to acceptances or, if not subject to an acceptance condition, wholly unconditional;
·           at any time prior to the completion of the Offer there is a breach of any of the warranties or undertakings given by GfK in the Merger Agreement which is material to the TNS Group taken as a whole in the context of the Offer or Merger, unless such breach is caused by a breach of the Merger Agreement by TNS;
·           GfK breaches its obligations in relation to the recommendation of the Offer by the GfK Management Board or the GfK Management Board withdraws or adversely modifies its recommendation;
·           by 22 July 2008 or such later date as the parties may agree in writing, the GfK-Nürnberg e.V. Members and the GfK-Nürnberg e.V. Advisory Board have not approved the entry by GfK-Nürnberg e.V. into the Irrevocable Undertaking and the Relationship Agreement;
·           a break fee is payable by GfK to TNS under the Merger Agreement; or
·          a Material Adverse Change Event occurs before the expiry of the acceptance period for the Offer in relation to GfK. 

The Merger Agreement may be terminated by written notice by GfK if : 

·           TNS has not published the Circular and Prospectus by 30 June 2008 (or such other date as may be agreed in writing GfK and TNS) validly convening a general meeting to consider the Resolutions for a date not later than 25 days after the publication of the Circular (or, if that day is not a Business Day, the next Business Day) (other than where any delay is attributable to a breach by GfK of certain of its obligations under the Merger Agreement);
·           TNS has not published the Offer Document by 20 August 2008 (or such other date as may be agreed in writing by the Parties) (other than where any delay is attributable to a breach by GfK of certain of its obligations under the Merger Agreement);
·           any of the Resolutions is not duly passed by 25 July 2008 or such later date as the parties may agree in writing;
·           any resolution is passed by the TNS Shareholders to approve a competing offer for all or a significant proportion of the TNS Shares or TNS’ business or any such competing offer becomes unconditional as to acceptances or, in the case of an offer not governed by the City Code, wholly unconditional;
·           at any time prior to the completion of the Offer there is a breach of any of the warranties or undertakings given by TNS in the Merger Agreement which is material to the GfK Group taken as a whole in the context of the Offer or Merger, unless such breach is caused by a breach of the Merger Agreement by GfK;
·           TNS breaches its obligations under the Merger Agreement in relation to the Circular containing an unqualified statement by the TNS Board that (a) it believes the Merger is in the best interests of TNS and its shareholders as a whole and (b) recommending that the TNS shareholders vote in favour of the Resolutions, or if the TNS Board withdraws or adversely modifies its recommendation fails to hold the TNS General Meeting by 25 July 2008 or recommends a competing offer for all or a significant proportion of the TNS Shares or TNS’ business;
·           the Offer is launched on terms that are less favourable to GfK or the GfK Shareholders than those agreed pursuant to the Merger Agreement;
·           (a) a firm intention to make an offer for TNS or a whitewash transaction in respect of TNS is announced; (b) a firm intention to make an offer for TNS which is subject to objective conditions that are not within the control of the offeror or a similarly conditioned whitewash transaction in respect of TNS is announced; or (c) a binding commitment to a transaction in respect of TNS (which, if consummated, would result in the ultimate parent company of GfK being a company other than TNS) is announced that in any of these cases is or becomes not subject to an unwaivable condition that the Offer is not made, withdrawn or lapses;
·           a break fee is payable or paid by TNS to GfK under the Merger Agreement; or
·           a Material Adverse Change Event occurs in relation to TNS before Admission.

The Merger Agreement may also be terminated by either party:

·           with the consent of the other party;
·           if the Offer does not become effective and wholly unconditional by 31 July 2009;
·           if the Offer lapses;
·           if TNS announces that the Offer will not be made; or
·           if any one of the conditions to the Offer becomes incapable of satisfaction and will not be waived by TNS (where capable of waiver).
 

1.3     Mutual break fee arrangements

TNS has undertaken to pay GfK a break fee of £10,623,000 (together with an amount in respect of VAT (if applicable) but subject to the overall limits imposed by the Listing Rules and the City Code) if, broadly: 

·           the TNS Shareholders fail to approve any of the Resolutions (or such approval is subsequently revoked or adversely modified);
·           the TNS Board withdraws or adversely modifies its recommendation of the Offer or recommends a competing transaction for all or a significant proportion of the TNS Shares or TNS’ business;
·           TNS does not call a shareholders meeting by 30 June 2008, does not hold such a meeting by 25 July 2008 (or adjourns a meeting beyond 25 July 2008), holds a meeting which does not consider all of the Resolutions, or fails to publish the Offer Document by 20 August 2008 (or such other date as the parties may agree);
·           a competing transaction in respect of TNS is announced prior to termination of the Merger Agreement and that transaction (or any other competing transaction for TNS which is announced prior to or within 6 weeks of the end of the current offer period) subsequently becomes unconditional as to acceptances or otherwise completes at any time;
·           a Material Adverse Change Event occurs with respect to TNS on or prior to the date of the Merger Agreement which was not announced at that time in breach of applicable disclosure obligations; or
·           the Merger Agreement is terminated by GfK because (a) TNS Shareholders approve a competing transaction for TNS; (b) a competing transaction for TNS becomes unconditional as to acceptances or, if not governed by the City Code, wholly unconditional; (c) the TNS Board breaches its obligations, or otherwise fails, to continue to recommend the Offer, fails to hold the general meeting by 25 July 2008, fails to publish the Circular and Prospectus by 30 June 2008 or the Offer Document by 20 August 2008, or recommends a competing transaction for all or a significant proportion of the TNS Shares or TNS business; or (d) TNS materially breaches the Merger Agreement.
A break fee will generally not be payable by TNS if, prior to the relevant circumstances triggering the break fee:
·        a break fee has become payable by GfK to TNS; or
·        in the case of the TNS Board withdrawing or adversely modifying its recommendation or recommending a competing transaction for TNS or the TNS Shareholders failing to approve any of the Resolutions:
o   if a Material Adverse Change Event occurred with respect to GfK, or
o   the GfK-Nürnberg e.V. Members and the GfK-Nürnberg e.V. Advisory Board have not approved the entry by GfK-Nürnberg e.V. into the Irrevocable Undertaking and the Relationship Agreement,
each such event being a “TNS Suspensory Event”.

Howeverwhere a break fee would be payable by TNS to GfK but for the occurrence of a TNS Suspensory Event, the break fee will nevertheless still be payable by TNS to GfK if any one of the events listed below occurred prior to the occurrence of the TNS Suspensory Event:

·        TNS Shareholders failing to approve any of the Resolutions; or
·        a Material Adverse Change Event occurring with respect to TNS; or
·        in relation to a TNS Suspensory Event comprising a failure by the GfK-Nürnberg e.V. Members or the GfK-Nürnberg e.V. Advisory Board to approve the entry by GfK-Nürnberg e.V. into the Irrevocable Undertaking and the Relationship Agreement, at the time of such failure, any person has announced (a) an offer or possible offer for TNS or (b) any other actual or possible transaction (including a whitewash transaction) to which the City Code applies in respect of TNS or (c) any other actual or possible transaction in respect of TNS which, if consummated, would result in the ultimate parent company of GfK being an entity other than TNS that, in any of cases (a), (b) or (c), does not have as an unwaivable term or condition the lapse or withdrawal of the Offer and in respect of which neither Rule 2.8 nor Rule 35.1 of the City Code applied.

GfK has undertaken to pay TNS a break fee equal to £10,623,000 (together with an amount in respect of VAT, if applicable, save that no amount in respect of VAT shall be payable to the extent that the VAT is not recoverable by GfK) if:

·          the GfK-Nürnberg e.V. Advisory Board or the GfK-Nürnberg e.V. Members fail to approve (or withdraw or adversely modify their approval of) the Irrevocable Undertaking and Relationship Agreement (other than in circumstances where certain condition precedents to the obligations of GfK-Nürnberg e.V. under the Irrevocable Undertaking are, at the date of such failure, not capable of satisfaction during the period of the Offer);
·           in circumstances where GfK-Nürnberg e.V. is in breach of its obligations under the Irrevocable Undertaking, the Offer lapses not having been accepted with respect to at least 50 per cent. of GfK’s issued share capital (plus one share) on a fully diluted basis;
·           the Management Board of GfK withdraws or adversely modifies its recommendation or recommends a competing transaction for all or a significant proportion of the GfK Shares or GfK’s business;
·           a Material Adverse Change Event occurs in relation to GfK on or prior to the date of the Merger Agreement which was not announced at that time in breach of applicable disclosure obligations;
·           the Offer lapses or is withdrawn or is not made in circumstances where a competing offer for GfK has been announced and that offer (or any other competing transaction for GfK which is announced prior to or within 6 weeks of the end of a notional offer period in respect of GfK) subsequently becoming unconditional in all respects or is otherwise completed at any time; and
·           the Merger Agreement is terminated by TNS because (a) GfK shareholders approve a competing transaction for GfK; (b) a competing transaction for GfK became unconditional as to acceptances or, if not subject to an acceptance condition, wholly unconditional; (c) the Management Board of GfK breaches its obligations to continue to recommend the Offer; or (d) GfK materially breaches the Merger Agreement.
A break fee will generally not be payable by GfK, if prior to the relevant circumstances triggering the break fee:
·        a break fee has become payable by TNS to GfK; or
·         in the case of the Management Board of GfK withdrawing or adversely modifying its recommendation or recommending a competing transaction for GfK or the GfK-Nürnberg e.V. Advisory Board or the GfK-Nürnberg e.V. Members failing to approve the Irrevocable Undertaking and Relationship Agreement or GfK-Nürnberg e.V. breaching its obligations under the Irrevocable Undertaking and the Offer lapsing without acceptances above 50 per cent.,
o   a Material Adverse Change Event occurred in relation to TNS; or
o   the TNS Shareholders fail to approve one of the Resolutions;
o   there has been an announcement of (a) any offer or possible offer for TNS or (b) any other actual or possible transaction (including a whitewash transaction) to which the City Code applies in respect of TNS or (c) any other actual or possible transaction in respect of TNS which, if consummated, would result in the ultimate parent company of GfK being an entity other than TNS, that, in any of cases (a), (b) or (c), does not have as an unwaivable term or condition, the lapse or withdrawal of the Offer and in respect of which neither Rule 2.8 nor Rule 35.1 of the City Code applies,
each such event being a “GfK Suspensory Event”.
However, where a break fee would be payable by GfK to TNS but for the occurrence of a GfK Suspensory Event, the break fee will nevertheless still be payable by GfK to TNS if any one of the events listed below occurred prior to the occurrence of a GfK Supervisory Event:
·        the failure by GfK-Nürnberg e.V. Members or the GfK-Nürnberg e.V. Advisory Board to approve the Irrevocable Undertaking and Relationship Agreement (or the relevant resolutions are not proposed by the required time in breach of the Irrevocable Undertaking); or
·        a Material Adverse Change occurred with respect to GfK.
Only one break fee will be payable in respect of the Merger.

1.4     Non-solicitation

Under the terms of the Merger Agreement GfK and TNS have each undertaken, subject to the fiduciary duties of their directors as regards taking any action following receipt of an unsolicited proposal or approach, not to solicit or encourage any competing offer for all or a significant portion of their respective shares or business or any proposal or any approach in relation thereto.

Each have also agreed to, subject to any confidentiality obligations, to notify the other party if it or any other member of its Group (or if it becomes aware that any of its or their directors, employees, advisers or agents) receives such a proposal or approach.

2.      Relationship Agreement

Following Completion, assuming full acceptance of the Offer by TNS Shareholders, GfK-Nürnberg e.V. will hold approximately 28.7 per cent. of GfK-TNS based on currently issued and outstanding shares. TNS and GfK-Nürnberg e.V. have entered into a Relationship Agreement which will come into force on Completion and which records the understanding between TNS and GfK-Nürnberg e.V. regarding the governance of GfK-TNS as the ultimate parent company of the Enlarged Group and certain entitlements of GfK-Nürnberg e.V. in respect of its New TNS Shares, following Completion.

The Relationship Agreement, and the rights and obligations under it, will remain in force for as long as GfK-Nürnberg e.V. owns or controls TNS Shares carrying not less than 15 per cent. of the voting rights exercisable at TNS general meetings, but will automatically terminate thereafter. In addition, the Relationship Agreement will automatically terminate if the Offer lapses or is withdrawn, or otherwise fails for any reason.

The Relationship Agreement provides that:

·           GfK-Nürnberg e.V. shall be entitled to appoint one non-executive director to the GfK-TNS Board;
·           the GfK-TNS Board immediately following Completion shall be as set out in this announcement;
·           unless otherwise agreed by GfK-Nürnberg e.V., GfK-TNS shall (i) retain the head office of its German operations in Nürnberg (with the global head office of GfK-TNS being in the London); (ii) hold at least one meeting of the GfK-TNS Board in Nürnberg each year; (iii) preserve and promote the “GfK” name and brand identity at the top company level and in Germany, although the “TNS” brand name may continue to be used in Germany where commercially advantageous; (iv) maintain market research and information services as a core activity of the Enlarged Group; (v) preserve and promote the Enlarged Group’s significant business operations in Nürnberg; (vi) by GfK-TNS using its best efforts on a commercial basis, maintain a central head office function of the company in Nürnberg; (vii) adopt and maintain the GfK orange colour as the Enlarged Group’s corporate identity colour; and (viii) retain “GfK-TNS” as the corporate name of the Enlarged Group (each of the above obligations being, where relevant, subject to TNS being entitled to use the relevant names and trade marks);
·           following Admission, (i) the nominations committee of the GfK-TNS Board shall be chaired by the chairman of the GfK-TNS Board; (ii) the chairperson of the remuneration committee of the GfK-TNS Board shall be Alice Perkins; and (iii) the chairman of the audit committee of the GfK-TNS Board shall be the additional independent director selected by TNS.

 

GfK-Nürnberg e.V. has agreed that it will not, for the period from Admission until the first anniversary of Admission, dispose of any TNS Shares without the prior approval of TNS, other than (i) pursuant to any purchase or redemption by TNS of its own shares; (ii) pursuant to any compromise or scheme of arrangement under Part 26 of the Companies Act 2006 providing for the acquisition by any person (or group of persons acting in concert) of 50 per cent. or more of the equity share capital of TNS; (iii) any transfer or acceptance (at any stage during such offer) pursuant to an offer made in accordance with the City Code by any person (whether alone or acting jointly with persons acting in concert with that person) to acquire the entire issued share capital of TNS; (iv) pursuant to any agreement to accept any offer made in accordance with the City Code to acquire the entire issued share capital of TNS either before or after the announcement of such offer; (v) in order to reduce the aggregate number of TNS Shares in which it, together with persons acting in concert with it, is interested to below 30 percent.; or (vi) disposals which in aggregate do not reduce GfK-Nürnberg e.V.'s holding by more than two percentage points over the period as a whole. 

Where TNS is contemplating undertaking a buy-back of its own shares, the Relationship Agreement requires it to obtain a waiver from the Panel, if necessary, to ensure GfK-Nürnberg e.V. will not be required to make a mandatory takeover offer for TNS following the buy-back and to confirm with the UKLA that GfK-Nürnberg e.V. may participate in such buy-back in accordance with the Listing Rules.

The Relationship Agreement also provides that GfK-Nürnberg e.V. and the Enlarged Group shall operate independently and that all transactions and relationships entered into between any member of the Enlarged Group and GfK-Nürnberg e.V. shall be conducted on arm's length terms and on a normal commercial basis.

From Admission and until GfK-Nürnberg e.V. no longer owns or controls any TNS Shares, GfK-Nürnberg e.V. has agreed not compete with any business carried on by the Enlarged Group, except that GfK-Nürnberg e.V. is not restricted from (i) conducting market, sales and consumer research on behalf of or commissioned by any member of the Enlarged Group, (ii) publishing research studies for not for profit purposes in a manner consistent with past practice, (iii) cooperating with or supporting domestic or foreign scientific research institutions, (iv) keeping a library, (v) supporting the training of market and sales researchers or the continued education of leadership personnel, or (vi) organising or sponsoring market research conferences.

3.      Irrevocable Undertakings

TNS has received irrevocable undertakings to accept the Offer within the first week of the Acceptance Period from those members of the Management Board of GfK and the Supervisory Board of GfK who hold GfK Shares (holding together a total of 379,249 GfK Shares representing in aggregate approximately 1.1 per cent. of the existing issued share capital of GfK). These irrevocable undertakings continue to be binding, even in the event of a higher offer being made for GfK, unless one of the conditions set out below occurs.

TNS has also received an undertaking to accept the Offer within the first week of the Acceptance Period from GfK-Nürnberg e.V. in respect of a total of 20,371,844 GfK Shares, representing approximately 56.8 per cent. of the existing issued share capital of GfK. This undertaking requires the approval of the GfK-Nürnberg e.V. Advisory Board and the GfK-Nürnberg e.V. Members and provided that such approval has been received, GfK-Nürnberg e.V. must accept the Offer and may not withdraw its acceptance, even in the event of a higher offer being made for GfK, unless one of the conditions set out below occurs. GfK-Nürnberg e.V. has undertaken to call the necessary meetings to seek the approval of the GfK-Nürnberg e.V. Advisory Board and the GfK-Nürnberg e.V. Members in respect of the undertaking.

Accordingly, TNS has received undertakings to accept the Offer in respect of, in aggregate, 20,751,093 GfK Shares, representing approximately 57.9 per cent. of the existing issued share capital of GfK.

3.1     Conditions to the Irrevocable Undertakings

Pursuant to the terms of the undertakings, GfK-Nürnberg e.V. and the relevant members of the Management Board of GfK and the Supervisory Board of GfK may not withdraw their acceptances of the Offer unless:

·           (in relation to GfK-Nürnberg e.V.) prior to the approval of the Irrevocable Undertaking by the GfK-Nürnberg e.V. Members and the GfK-Nürnberg e.V. Advisory Board, a third party offer is launched which the Management Board of GfK determines, acting reasonably and in good faith, is more favourable to GfK and its shareholders than the Offer;
·           TNS does not publish the Offer Document in accordance with applicable laws;
·           the Merger Agreement or (in the case of GfK-Nürnberg e.V.) the Relationship Agreement are validly terminated in accordance with their terms;
·           the Offer is not launched on terms and conditions corresponding to, or more favourable to, GfK and to GfK’s shareholders than those agreed with GfK;
·           TNS Shareholders do not validly pass the TNS Resolutions (or, if the TNS Resolutions are approved, they subsequently withdraw or adversely modify such approval);
·           the Panel does not grant (or withdraws) a waiver of the obligation on GfK-Nürnberg e.V., if applicable, to make a mandatory offer under Rule 9 of the City Code which would otherwise arise as a result of (i) the Merger; (ii) the repurchase by TNS of its own shares; or (iii) the making of any share awards to, or any issue or exercise of any options or awards or other conversion or subscription rights in respect of any TNS Shares by or to, any person acting in concert with GfK-Nürnberg e.V.;
·           there is an announcement of (a) an offer or possible offer for TNS or (b) any other actual or possible transaction (including a whitewash transaction) to which the City Code applies in respect of TNS or (c) any other actual or possible transaction in respect of TNS which, if consummated, would result in the ultimate parent company of GfK being an entity other than TNS that, in any of cases (a), (b) or (c), does not have as an unwaivable term or condition the lapse or withdrawal of this Offer and in respect of which neither Rule 2.8 nor Rule 35.1 of the City Code applies;
·           the new credit facility arranged by TNS to replace the current bank facilities of GfK does not become effective, or ceases to be effective when no replacement facility has been arranged; or

·           a Material Adverse Change Event occurs in relation to TNS.

4.      Offer Terms

The Offer, consisting of 11.74 New TNS Shares for each GfK Share, will be made by TNS in accordance with German takeover laws.  

Application to BaFin will be made that GfK Shareholders resident in Australia, Japan or the United States (except for qualified institutional buyers in the United States) may be excluded from receiving the Offer.

The Offer itself will be subject to a number of conditions (the "Offer Conditions") including:

·           that TNS acquires at least 75 per cent. of all GfK Shares prior to expiry of the Acceptance Period (“Minimum Acceptance Threshold”);
·           that European, US and other government anti-trust authorities clear the Merger;
·           that no Material Adverse Change Event occurs in relation to GfK; and
·           Admission. 

TNS is entitled to waive one or more of the Offer Conditions to the extent permitted by law, and may reduce the Minimum Acceptance Threshold at any time up to one business day prior to the expiry of the Acceptance Period, provided that TNS has acquired more than 50 per cent. of the GfK Shares in aggregate by the expiry of the Acceptance Period, whether pursuant to the Offer or otherwise. TNS may only waive the Offer Conditions relating to antitrust clearance in the U.S. (HSR) and by the European Commission with the prior approval of GfK.

The Acceptance Period for the Offer shall, subject to any extensions, remain open for 4 to 10 weeks after the publication of the Offer Document. The Offer will remain open for an additional period not expiring before 17 October 2008 if the Minimum Acceptance Threshold has been reached during the Acceptance Period.

The GfK Shareholders who have accepted the Offer shall have the right to withdraw their acceptance from the Offer at any time during the Acceptance Period.

The acceptance of the Offer and issue of TNS Shares to GfK Shareholders will be free of costs and expenses.

5.      Confidentiality and Standstill

GfK and TNS have agreed that until 30 June 2009 they will hold confidential any information exchanged between them and use that information solely for the purposes of evaluating a merger between the companies (notwithstanding how such merger is effected). These confidentiality obligations are subject to standard exceptions and each of GfK and TNS have indemnified the other against all losses suffered as a result of a breach of such obligations by them.

The parties have also agreed not to, without the other's prior written consent, acquire an interest in any shares or securities of the other or announce or make any offer for or proposal in connection with all or any of the other's shares or securities. These restrictions shall cease to apply on the earlier of: (i) 31 March 2009; (ii) the board of directors of either GfK or TNS agreeing to recommend an offer for their company by the other party; (iii) a third party announcing a firm intention to make an offer for either party; (iv) a third party announcing a firm intention to make an offer for either party subject to the satisfaction of objective pre-conditions not under that party's control; (v) either party providing to a third party information relating to its prospective financial performance in the context of a proposal or potential proposal for a transaction that would fall under (iii) or (iv) above or (vi) below or in relation to an offer or proposal to acquire 30 per cent. or more of the shares carrying voting rights in that company; or (vi) either party announces a "whitewash" proposal or a reverse takeover.

However, under the terms of the Merger Agreement, GfK is free to work on any alternative proposal involving TNS and GfK, including (without limitation) an offer or possible offer or any other actual or possible transaction to which the City Code applies, in respect of TNS or involving both TNS and GfK, and shall be entitled to use the information provided to it by TNS for this purpose and TNS is required to provide all assistance reasonably requested by GfK in relation to any such alternative proposal.

 

Appendix c
Bases and sources
1.         Unless otherwise stated:
(a)        financial information relating to GfK has been extracted from the audited Annual Report and Accounts for GfK for the year ended 31 December 2007 and the unaudited GfK Q1 2008 financial results for the 3 months ended 31 March 2008; and
(b)        financial information relating to TNS has been extracted from the audited Annual Report and Accounts for TNS for the year ended 31 December 2007.
2.         Unless otherwise stated:
(a)        for income statement figures for the year ended 31 December 2007, the exchange rate is £1 = €1.4615, calculated as the average exchange rate over the year from 1 January 2007 to 31 December 2007;
(b)        for balance sheet figures as at 31 December 2007, the exchange rate is £1 = €1.3615, the exchange rate on 31 December 2007;
(c)        for income statement figures for the period from 1 January 2008 to 31 March 2008, the exchange rate is £1 = €1.3208, calculated as the average exchange rate over the period from 1 January 2008 to 31 March 2008;
(d)        for balance sheet figures as at 31 March 2008, the exchange rate is £1 = €1.2543, the exchange rate on 31 March 2008;
(e)        for income statement figures for the period from 1 January 2007 to 31 March 2007, the exchange rate is £1 = €1.4915, calculated as the average exchange rate over the period from 1 January 2007 to 31 March 2007;
(f)        for current and future figures the exchange rate is £1 = €1.27165, the exchange rate on 30 May 2008; and
(g)        all exchange rate figures are sourced from Datastream.
3.         As at close of business on 2 June 2008, GfK had 35,864,333 ordinary shares of no nominal value issued and outstanding; and TNS had 412,861,152 ordinary shares of 5 pence each issued and outstanding.
4.         The fully diluted share capital of 37,142,638 for GfK is calculated on the basis of:
(a)        the number of issued GfK Shares; and
(b)        1,278,305 GfK share options.
5.         The fully diluted share capital of 439,351,328 for TNS is calculated on the basis of:
(a)        the number of issued and outstanding TNS Shares; and
(b)        26,490,176 TNS share options and share settled share awards, adjusted for shares held in Trust against exercise of these options.
6.         Neither Adjusted EBITDA nor Adjusted Operating Income is a measurement of performance under IFRS and a reader should not consider Adjusted EBITDA and Adjusted Operating Income as either:
(a)        an alternative to operating result or net result (as determined in accordance with generally accepted accounting principles) as a measure of the combined Group’s operating performance;
(b)        as an alternative to net cash outflows or inflows from operating, investing and financing activities (as determined in accordance with generally accepted accounting principles) as a measure of the combined Group’s ability to meet its cash needs; or
(c)        as an alternative to any other measure of performance under generally accepted accounting principles.

Adjusted EBITDA is commonly reported by companies and widely used by investors and other interested parties as a measure of a company's operating performance and debt servicing ability because it assists in comparing performance on a consistent basis without regard to depreciation and amortisation, which can vary significantly depending upon accounting methods (particularly when acquisitions are involved) or non-operating factors (such as historical cost). Similarly Adjusted Operating Income is also used by investors and other related parties as a measure of a company's operating performance and debt servicing ability because it assists in comparing performance on a consistent basis. Accordingly, this information has been disclosed here to permit a more complete and comprehensive analysis of the combined Group's operating performance.

Because companies calculate Adjusted EBITDA and Adjusted Operating Income differently this presentation of Adjusted EBITDA and Adjusted Operating Income may not be comparable to similarly titled measures of other companies.

Appendix D
KPMG Merger Benefits report


The Directors

Taylor Nelson Sofres plc

TNS House

Westgate

London W5 1UA


Deutsche Bank AG, London branch

Winchester House

1 Great Winchester Street

London EC2N 2DB


JPMorgan Cazenove Limited

20 Moorgate

London

EC2R 6DA




3 June 2008


Dear Sirs

Taylor Nelson Sofres plc


We refer to the statement made by the directors of Taylor Nelson Sofres plc ('the Directors') on page 2 of the press release ('the Statement') to the effect that:

"The annual pre-tax benefits through cost reduction are expected to be at least €97 million (£76 million) by the end of the third full year following Completion, with related non-recurring costs expected to achieve such reductions expected to be around €120 million (£94 million)."

The Statement has been made in the context of the disclosures within Appendix F setting out, inter alia, the basis of the Directors' belief (including sources of information) supporting the Statement and their analysis and explanation of the underlying constituent elements.

This report is required by Note 8(b) to Rule 19.1 of the City Code on Takeovers and Mergers ('the City Code') and is given for the purpose of complying with that requirement and for no other purpose.  

Responsibility

The Statement is the responsibility solely of the Directors. It is our responsibility and that of Deutsche Bank AG, London branch, and JPMorgan Cazenove Limited to form respective opinions, as required by Note 8(b) to Rule 19.1 of the City Code as to whether the Statement has been made by the Directors with due care and consideration.


Save for any responsibility which we may have to those persons to whom this report is expressly addressed (as required by Note 8(b) to Rule 19.1 of the City Code), to the fullest extent permitted by law we do not assume any responsibility and will not accept any liability to any other person for any loss suffered by any such other person as a result of, arising out of, or in connection with this report.

Basis of opinion

We have discussed the Statement, together with the underlying plans, with the Directors and with Deutsche Bank AG, London branch, and JPMorgan Cazenove Limited. We have also considered the letters dated 3 June 2008 from Deutsche Bank AG, London branch, and JPMorgan Cazenove Limited to the Directors on the same matter. Our work did not involve any independent examination of any of the financial or other information underlying the Statement.  We conducted our work in accordance with Standards for Investment Reporting issued by the Auditing Practices Board of the United Kingdom. 

We do not express any opinion as to the achievability of the benefits identified by the Directors in the Statement. The Statement is subject to uncertainty as described in Appendix F  to the Statement. Because of the significant changes in the enlarged group's operations expected to flow from the merger and because the Statement relates to the future, the actual merger benefits achieved are likely to be different from those anticipated in the Statement and the differences may be material.

Opinion

On the basis of the foregoing, we report that in our opinion the Directors have made the Statement, in the form and context in which it is made, with due care and consideration.

Yours faithfully


KPMG LLP

Appendix E
deutsche bank and jpmorgan cazenove merger benefits report




Deutsche Bank AG, London Branch

 Winchester House

1 Great Winchester Street

London

EC2N 2DB


JPMorgan Cazenove

20 Moorgate

London

EC2R 6DA


The Directors

Taylor Nelson Sofres plc

Westgate

London

W5 1UA


3 June 2008


Dear Ladies and Gentlemen


Taylor Nelson Sofres plc ("TNS") merger with GfK Aktiengesellschaft ("GfK") ("Merger")


Deutsche Bank AG, London Branch and JPMorgan Cazenove (together, "we") refer to the statement of merger benefits (the "Statement") and the basis of preparation as set out in the announcement dated 3 June 2008 (the "Announcement") in connection with the Merger.


We have discussed the Statement, together with the relevant bases of belief (including the explanation of the sources of merger benefits and basis of preparation in Appendix F to the Announcement) with the Directors of TNS and GfK. The Statement is subject to uncertainty as described in Appendix F to the Announcement and, although we did review certain financial or other information underlying the Statement, our work did not involve any independent verification of such information.


We have relied upon the financial and other information reviewed by us being accurate and complete (in each case in all material respects) and have assumed such accuracy and completeness for the purposes of this letter. In giving the confirmation set out in this letter, we have reviewed the work carried out by KPMG LLP and have discussed with them the conclusions stated in their letter dated 3 June 2008. 


We do not express any opinion as to the achievability of the merger benefits estimated by TNS and GfK.


On the bases of the foregoing, we consider that the Statement has been made with due care and consideration in the form and context in which it is made.


This letter is provided solely to the Directors of TNS for the purposes of reporting to TNS under Note 8 (b) to Rule 19.1 of the City Code on Takeovers and Mergers and for no other purpose.


Yours faithfully


For Deutsche Bank AG, London Branch





Gavin Deane                     Manny Chohhan

Managing Director            Director



For JPMorgan Cazenove





Malcolm Moir                       Hugo Baring

Managing Director                Managing Director





Appendix F
explanation of sources of merger benefits and basis of preparation

Source of potential revenue enhancement benefits


The Management Board of GfK and the Board of TNS have identified a number of potential revenue enhancement opportunities from the Merger. These include revenue enhancement opportunities in the following businesses of the Enlarged Group: 


Custom Research: Leveraging TNS and GfK's Consumer panel (Worldpanel) client bases to sell Custom Research products and capabilities. Introduction of new and enhanced products such as BPO, Shopper and NPD through the combination of attitudinal and behavioural information.


Worldpanel: Cross-selling of Worldpanel to GfK's clients and the international roll-out of new products.


Healthcare: International roll-out of Social Media, Therapeutic Class studies and OTC and patient behaviour capabilities across the GfK and TNS Healthcare network. Introduction of new services such as promotional spending services.


Media: Cross-selling of News and Advertising monitor capabilities and Infosys to the GfK client base. The international roll-out of Compete in Germany and the introduction of new products into the USA which combine TNS Media and MRI.


Technology: Cross-selling of Custom Research to the GfK RA client base and the international roll-out of Com Tech into the Nordic region and Central and Eastern Europe.


Automotive: Cross-selling of TNS' Brand and Com capabilities to the GfK client base primarily in the US and UK. 


Financial Services: Cross-selling of AOE to GfK clients. The roll-out of GfK's syndicated products and new products including tailoring the Consumer Panel's business to financial services and trackers using GfK's Octopus platform and SFE for Branch banking.


Sources of expected cost savings


The Management Board of GfK and the Board of TNS believe that annual pre-tax benefits to the Enlarged Group of at least €97 million (£76 million) by the end of the third full year following Completion can be achieved via the following initiatives:


Data collection and production in Custom Research: Annual estimated pre-tax cost savings of approximately €35 million (£28 million) through elimination of overlap in data collection infrastructure, economies of scale and increased capacity utilisation.


Platforms and infrastructure: Annual estimated pre-tax cost savings of approximately €24 million (£19 million) through common product development, data collection, production and delivery efficiencies across other sectors (Retail and Technology, Consumer Tracking, Healthcare and Media). 


Corporate, shared services and IT: Annual estimated pre-tax cost savings of approximately €25 million (£20 million) through de-duplication of Group functions, scale economies in IT provision and greater adoption of shared services across the Enlarged Group.


Offshoring, property and procurement: Annual estimated pre-tax cost savings of approximately €13 million (£10 million) through extending offshoring across the new enlarged company; rationalisation of the property portfolio and economies of scale in purchasing.


Sources of expected costs of achieving merger benefits 


The Management Board of GfK and the Board of TNS have estimated total non-recurring costs of achieving the merger benefits of approximately €120 million (£94 million). This estimate is based on costs of change in Custom Research of approximately €42 million (£33 million); other sectors such as Retail and Technology, Consumer Tracking, Healthcare and Media of €29 million (£23 million); back office and corporate of €33 million (£26 million), and other costs for offshoring and property rationalisation of €16 million (£13 million).


General basis of preparation 


Baseline cost numbers for each of GfK and TNS for the financial year ended 31 December 2007 were used to derive and help validate cost saving targets for the Enlarged Group. Baseline cost numbers were reviewed by the relevant business heads across a number of business areas including Custom Research, other sectors (Retail and Technology, Consumer Tracking, Healthcare and Media), corporate overheads and other costs such offshoring and property. In determining expected cost savings, the degree of overlap between GfK and TNS was taken into account as were potential economies of scale. For each business area, a top down review of the one-off costs of achieving the costs savings was estimated.


The estimated merger benefits have been reported on under the City Code by KPMG and TNS' financial advisors (Deutsche Bank and JPMorgan Cazenove).  


Notes to this Appendix 


The Merger benefits and related non-recurring costs to achieve the Merger benefits referred to in this announcement have been calculated on the basis of the existing cost and operating structures of the companies and by reference to current prices and the current regulatory environment. These statements relate to future actions and circumstances which, by their nature, involve risks, uncertainties and other factors. Because of this, the cost reductions referred to may not be achieved, or those achieved could be materially different from those expected. These statements should not be interpreted to mean that the earnings per share in the first full financial year following Completion, or in any subsequent period, would necessarily match or be greater than those for the relevant preceding financial period. Further details set are out in the Merger Benefits Reports contained in Appendices D and E inclusive.


Appendix G
DEFINITIONS

The following definitions apply throughout this announcement unless the context otherwise requires:

Adjusted EBITDA
is Adjusted Operating Income before depreciation and amortisation of intangibles for the period;
 
Adjusted Operating Income
is calculated as operating income for the financial period before exceptional items, including: restructuring costs, goodwill impairment, amortisation of acquired intangibles and other non-recurring items;
 
Adjusted Operating Margin
is calculated as Adjusted Operating Income as a percentage of revenue for the period;
 
Admission
the admission of the entire issued share capital of TNS to the Official List in accordance with the Listing Rules and the admission of the New TNS Shares to trading on the London Stock Exchange’s main market for listed securities in accordance with the Admission and Disclosure Standards;
 
Admission and Disclosure Standards
the requirements contained in the publication “Admission and Disclosure Standards” (as amended from time to time) containing, amongst other things, the admission requirements to be observed by companies seeking admission to trading on the London Stock Exchange’s main market for listed securities;
 
BaFin
German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht);
 
Business Day
any day on which banks are generally open in England and Germany for the transaction of general banking business, other than a Saturday or Sunday or a public holiday;
 
Circular
the circular to be sent to TNS Shareholders containing details of the Merger and the notice convening the TNS General Meeting;
 
City Code
the City Code on Takeovers and Mergers issued from time to time by or on behalf of the Panel;
 
Completion
Admission;
 
Completion Date
the date of Completion;
 
Deutsche Bank
Deutsche Bank AG, London branch;
 
EBIT
earnings before interest and taxes;
 
EBITDA
earnings before interest, tax, depreciation and amortisation;
 
Enlarged Group
with effect from Completion, the combined TNS Group and GfK Group;
 
EURO” or “
the lawful currency of Germany;
 
FSA
the UK Financial Services Authority;
 
FSMA
the UK Financial Services and Markets Act 2000 (as amended);
 
GfK
GfK Aktiengesellschaft, registered in Germany (and recorded in the Commercial Register at the Local Court of Nürnberg under number HRB 9398);
GfK Group
GfK and its subsidiaries and associated undertakings and, where the context admits, each of them;
 
GfK-Nürnberg e.V.
GfK-Nürnberg, Gesellschaft Für Konsum-, Markt- Und Absatzforschung e.V., a non-commercial association established under the laws of Germany and registered with the register of associations (Verein register) of the local court of Berlin-Charlottenburg under registered number VR998B (GfK-Nürnberg), the current 56.8 per cent. shareholder in GfK;
GfK-Nürnberg e.V. Advisory Board
the advisory board (Verwaltungsrat) of GfK-Nürnberg e.V.;
GfK-Nürnberg e.V. General Assembly
the general assembly (Mitgliederversammlung) of the GfK-Nürnberg e.V. Members;
GfK-Nürnberg e.V. Members
the members (Mitglieder) of GfK-Nürnberg e.V.;
GfK Shareholders
holders of GfK Shares;
 
GfK Shares
ordinary non-par value bearer shares of GfK;
 
GfK-TNS Articles
the articles of association of TNS currently in force as proposed to be amended with effect from Completion by the special resolution to be proposed at the TNS General Meeting to approve the Merger and, the articles of association of TNS adopted on 7 May 2008 with effect from 1 October 2008 as proposed to be amended with effect from Completion by a special resolution to be proposed at the TNS General Meeting;
 
GfK-TNS Board
the proposed board of directors of GfK-TNS immediately following completion of the Merger;
 
IFRS
International Financial Reporting Standards as adopted for use in the EU;
 
Irrevocable Undertaking
the irrevocable undertaking dated 3 June 2008 given by GfK-Nürnberg e.V. to TNS, the proposed terms of which are summarised in Appendix B of this announcement;
 
“JPMorgan Cazenove”
JPMorgan Cazenove Limited;
 
“KPMG”
KPMG LLP;
 
Listing Rules
the rules and regulations of the UKLA, as amended from time to time and contained in the UKLA’s publication of the same name;
 
London Stock Exchange
London Stock Exchange plc, together with any successors thereto;
 
Management Board of GfK
the management board of GfK;
 
Material Adverse Change Event
(i) in relation to GfK, broadly any event or events which result in or are likely to result in a reduction in the adjusted operating profit of GfK for the financial year ended 31 December 2008 of at least €33.26 million or for the six month period ended 30 June 2008 of at least €13.9 million;
(ii) in relation to TNS, broadly any event or events which result in or are likely to result in a reduction in the adjusted operating Profit of TNS for the financial year ended 31 December 2008 of at least £24.36 million or for the six month period ended 30 June 2008 of at least £10.16 million;
 

Merger
the proposed merger of TNS and GfK to be effected by the acquisition by TNS of GfK pursuant to the Offer;
 
Merger Agreement
the agreement dated 3 June 2008 between TNS and GfK setting out the terms and conditions of, and the arrangements for the implementation of, the Merger, the proposed terms of which are summarised in Appendix B of this announcement;
 
Net Debt
is defined as borrowings, overdrafts and obligations under finance leases, less cash and cash equivalents;
 
New TNS Shares
the TNS Shares proposed to be issued, credited as fully paid, to GfK Shareholders pursuant to the Merger;
 
Offer
the recommended offer to be made, subject to the passing of the Resolutions, by TNS to acquire the entire issued and to be issued ordinary share capital of GfK and, where the context admits, any subsequent revision, variation, extension or renewal of such offer, the principal terms of which are summarised in item 4 of Appendix B of this announcement;
 
Offer Conditions
the conditions of the Offer as set out in paragraph 4 of Appendix B;
 
Offer Document
the document to be sent to GfK Shareholders which will contain, inter alia, the full terms and conditions of the Offer;
 
Official List
the official list of the UKLA;
 
Overseas Shareholders
GfK Shareholders who are resident in, ordinarily resident in, or citizens of, jurisdictions outside the United Kingdom and Germany;
 
Panel
the Panel on Takeovers and Mergers;
 
Pounds,Pence,£”and“p
the lawful currency of the United Kingdom;
 
Proposed Directors
Hajo Riesenbeck, Christian Weller von Ahlefeld, Prof. Dr. Klaus Wübbenhorst, Dr. Wolfgang Berndt, Petra Heinlein, Dr. Gérard Hermet and Dr. Arno Mahlert;
 
Prospectus
the prospectus to be published by TNS in relation to the Merger and Admission;
 
Relationship Agreement
the relationship agreement dated 3 June 2008 between GfK-Nürnberg e.V. and TNS governing the relationship between GfK-Nürnberg e.V. and TNS following Completion of the Merger;
 
“Resolutions”
the resolutions in relation to the implementation and approval of the Merger and the Waiver to be proposed at the TNS General Meeting and to be set out in the notice contained in the Circular;
 
“Rothschild
NM Rothschild & Sons Limited, registered in England and Wales (No. 925279)
 
SEC
the US Securities and Exchange Commission;
Securities Act
the US Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder;
Supervisory Board of GfK
the supervisory board of GfK;
“Takeover Act
the German Securities Acquisition and Takeover Act (Wertpapiererwerbs-und Ǖbernahmegesetz);
TNS”, “GfK-TNS” or the“Company
Taylor Nelson Sofres, registered in England and Wales (no. 00912624) and proposed to be re-named “GfK-TNS” upon Completion;
TNS Board”or “TNS Directors”
the board of directors of TNS at the date of this announcement (excluding, for the avoidance of doubt, the Proposed Directors);
TNS General Meeting
the general meeting of TNS to be convened for the purpose of considering and, if thought fit, approving the Merger and the Resolutions;
TNS Group
TNS and its subsidiaries and associated undertakings and, where the context admits, each of them;
TNS Shareholders
holders of TNS Shares;
TNS Shares
ordinary shares of 5 pence each in the capital of TNS (including, if the context so requires, the New TNS Shares);
UBS
UBS Deutschland AG acting through UBS Investment Banking Department;
UK”or“United Kingdom
the United Kingdom of Great Britain and Northern Ireland;
UKLA
the UK Listing Authority, being the FSA acting in its capacity as the competent authority for listing under Part VI of FSMA;
US” or“United States”or“United States of America
the United States of America, its territories and possessions, any State of the United States and the District of Columbia;
US dollar”or“$
the lawful currency of the United States; and
Waiver
the proposed waiver by the Panel of any obligation which would otherwise arise under Rule 9 of the City Code requiring GfK-Nürnberg e.V. or any person acting in concert with GfK-Nürnberg e.V. to make a mandatory offer for the remainder of the entire issued share capital of TNS as a result of: (i) the Merger; (ii) the repurchase by TNS of its own shares ; or (iii) the making of any share awards to, or any issue, grant or exercise of any options or awards or other conversion or subscription rights in respect of any TNS Shares by or to, any person acting in concert with GfK-Nürnberg e.V.


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
MSCSSEEDESASEDM