RNS Number : 3428Y
Taylor Nelson Sofres PLC
04 July 2008
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
4 July 2008
Taylor Nelson Sofres plc ('TNS')
Update on voting of GfK-Nürnberg e.V. ("GfK Verein") and response to misleading statements disseminated by WPP
The Board of TNS is pleased to note the announcement made by GfK AG ("GfK") today that the Administrative Board of GfK Verein has, as anticipated, voted in favour of the merger of GfK and TNS, thereby demonstrating its unambiguous support for the merger and confidence that the vote of the GfK Verein on 21 July 2008 will be similarly successful.
Donald Brydon, Chairman of TNS, commented:
"We are very pleased that the Administrative Board of the Verein has voted positively in favour of the merger with TNS. We look forward to working with GfK to create an exciting new global force in market research that will be the envy of our peers."
The Board wishes to emphasise that TNS' business is not the media business, nor is it advertising. It provides market information and advisory services. The Board believes that the strong growth prospects in its industry will be more than captured by GfK-TNS.
The demand for information remains a key requirement in terms of clients' understanding of how their brands are performing and how to maximise their performance in a changing environment.
This means that while advertising may have a challenging future, the Board believes that the demand for information and, in particular, how consumers engage with brands is increasing. The combination of GfK-TNS will be a strong company in this growth industry.
GfK-TNS will create a powerful new business model, that will have at its core key market measurement capabilities that track actual consumer behaviour, whether that be what consumers buy in the supermarket or from the consumer electronics outlet or what they watch on television or over the internet. Through the strength of capabilities in its custom research business, GfK-TNS will also be in a position to help clients understand their consumers' views and attitudes to the brands and products they put into the marketplace, a marketplace that changes every day.
Further to the announcement and comments by WPP on 3 July 2008, the Board of TNS wishes to correct some of the misleading statements made by WPP to the market and media in connection with its proposals to TNS.
WPP continues to demand that TNS open its books and treat it fairly in terms of information disclosure. WPP has all the financial information on TNS that has been shared with GfK. This is more than is required to value a public company. TNS met for over four hours with WPP management and has answered numerous questions raised by WPP pertinent to the information provided. WPP is a competitor of TNS and TNS does not intend to share information with WPP that it has not shared with GfK.
THE BOARD BELIEVES THAT THE NEW BUSINESS MODEL OF GfK-TNS IS AN OPTIMAL MODEL FOR CLIENTS
The combination of GfK-TNS will provide a new sector led approach for clients, which the Board believes will revolutionise market research and therefore bring benefits to TNS shareholders. WPP's Kantar-TNS proposition may offer scale but it does not fundamentally change the client offering.
- THE BOARD IS CONFIDENT THAT GfK-TNS WILL REACH ITS MARGIN TARGET OF BEYOND 15% IN THE MEDIUM TERM*
The Board has an objective to reach an adjusted operating margin for GfK-TNS in the medium term of beyond 15%* to be delivered through:
A greater proportion of the business being in syndicated research which has higher margins
The achievement of efficiencies through the ongoing improvement programmes
The delivery of the expected merger benefits
The delivery of increased advisory services for which value will be obtained.
The Board of TNS notes that WPP is targeting an operating margin of approximately 13% in the medium term for a possible combined Kantar-TNS. The Board also notes that TNS calculates margins to exclude profit from associates, whereas WPP includes associates' profit which, by comparison, inflates margins because the corresponding revenue is excluded.
When WPP questions the ability of GfK and TNS to deliver these significant merger benefits, announced by TNS and GfK on 3 June 2008, it fails to understand that the Board has already committed to incentivise its executives to ensure that they successfully deliver the merger benefits.
WPP has stated that if TNS moved in line with the media sector, its share price would be significantly lower. TNS is the only UK quoted, independent market information company, operating in an industry that is demonstrating significant growth. Comparing TNS with a wider media index is misleading
In contrast, the Board also notes that WPP's own recent share price performance has been poor, having fallen by 28% at market close on 3 July 2008 since WPP's proposal for TNS on 13 May 2008.
- THE BOARD BELIEVES THAT WPP'S COMMENTS ON THE NFO INTEGRATION ARE ALSO MISLEADING
In the NFO transaction, the integration costs were indeed larger than originally anticipated because TNS delivered significantly more annualised synergies than originally expected. WPP has failed to remind investors that the ongoing benefits have delivered substantial shareholder value.
The Board of TNS continues to recommend that shareholders vote in favour of the merger at the TNS General Meeting being held on 18 July 2008.
As required by the Takeover Code, TNS confirms that this announcement is not being made with the agreement or approval of WPP. There can be no certainty that an offer will be made nor as to the terms on which any offer might be made.
Donald Brydon, Chairman of TNS said:
"The Board considers that it is important for all shareholders to have proper information on which to make judgments.
''Given the significant value of the new business model of GfK-TNS, the Board of TNS continues to unanimously recommend that shareholders vote in favour of the merger at the TNS General Meeting being held on 18 July 2008."
* The statement regarding 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 of GfK.
Press enquiries to Brunswick +44 20 7404 5959
David Yelland, Jonathan Glass
Christine Graeff +49 69 2400 5512
TNS +44 20 8967 1584
Janis Parks, Head of Investor Relations
Deutsche Bank +44 20 7545 8000
(Lead Financial Adviser and Joint Broker)
Kristian Bagger, Gavin Deane, Manny Chohhan
Charles Wilkinson, Martin Pengelley (Corporate Broking)
JPMorgan Cazenove +44 20 7588 2828
(Financial adviser and Joint Broker)
Malcolm Moir, Andrew Hodgkin, Hugo Baring
Deutsche Bank AG is authorised under German Banking Law (competent authority: BaFin - Federal Financial Supervising Authority) and regulated by the Financial Services Authority for the conduct of UK business. Deutsche Bank AG is acting as lead financial adviser and also as joint corporate broker to TNS, and no-one else in connection with the Revised Proposal and 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 Revised Proposal and Merger or any matter referred to herein.
JPMorgan Cazenove, which is 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 Revised Proposal and Merger and will not be responsible to anyone other than TNS for providing the protections afforded to customers of JPMorgan Cazenove or for providing advice in relation to the Revised Proposal and Merger or any other matter referred to herein.
This announcement does not constitute an offer to sell or a solicitation of an offer to buy securities in the United States. Securities may not be offered or sold in the United States absent registration or an applicable exemption from registration. The shares have not been, and will not be, registered under the US Securities Act of 1933 or the securities laws of any state of 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.
Dealing Disclosure Requirements
Under the provisions of Rule 8.3 of the Takeover Code (the 'Code'), if any person is, or becomes, 'interested' (directly or indirectly) in 1% or more of any class of 'relevant securities' of TNS or WPP, all 'dealings' in any 'relevant securities' of that company (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 3.30 pm (London time) on the London business day following the date of the relevant transaction. This requirement will continue until the date on which 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 or WPP, they will be deemed to be a single person for the purpose of Rule 8.3.
Under the provisions of Rule 8.1 of the Code, all 'dealings' in 'relevant securities' of TNS or WPP by TNS or WPP, 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 Takeover 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 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, you should consult the Panel.
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