TAYLOR Nelson Sofres Plc and Germany's GfK AG have agreed to a merger that will form the world's second-biggest market research company to challenge Nielsen Co.
Taylor Nelson will issue 11.74 new shares for each GfK share, the companies said yesterday. Shareholders of London-based Taylor Nelson and owners of GfK would each hold about 50 percent of the share capital of the new company, to be named GfK-TNS Plc, Bloomberg News reported.
David Lowden, Taylor Nelson's chief executive officer, will be CEO of the combined company.
The combination may trigger a hostile bid by WPP Group Plc, the world's second-largest advertising company, for Taylor Nelson. WPP, which has said there is a "powerful" logic in combining Taylor Nelson with its Kantar research unit, has made three unsolicited bids for Taylor Nelson, the most recent valuing it at 976 million pounds (US$1.9 billion).
"There is sound logic in combining these businesses," said Lorna Tilbian and Richard Hitchcock at Numis Securities Ltd in London. "However, we expect WPP to come back with an improvement on its last offer for TNS."
GfK rose as much as 2.96 euros (US$4.57), or 11 percent, to 30.65 euros, and traded at 29.60 euros as of 1:29pm yesterday in Frankfurt. Taylor Nelson rose 1.25 pence, or 0.5 percent, to 257.25 pence as of 11:29pm in London trading. The companies announced on April 29 that they were in talks to merge. Taylor Nelson shares have jumped 20 percent since it said on May 4 that it received offers from WPP. The increase has lifted the value of the merger for GfK.
The combined company's 14-member board will be chaired by Hajo Riesenbeck, who holds that post for the supervisory board of Nuremberg, the provider of the GfK German consumer confidence index. Klaus Wuebbenhorst, GfK's CEO, will join the Gfk-TNS board as a non-executive director. GfK-TNS will be based in London. Each company will have seven board members.
The two companies had combined revenue of US$3.9 billion last year, while Nielsen had sales of US$4.7 billion. GfK and Taylor Nelson said they would extend coverage in Asia, Latin America and eastern Europe. Taylor Nelson researches consumer habits for clients including Procter & Gamble Co and Nestle SA.
The merger will result in annual cost savings of at least 97 million euros before tax by the end of the third full year after completion, according to GfK and Taylor Nelson.