Issue: Tempus takeover
The media came out with all guns blazing at the news that WPP, the
world's largest advertising and marketing group, was trying to 'wriggle
out' (Daily Express, 13/10) of its takeover bid for smaller rival
Tempus. The saga had 'all the twists and turns of a mafia saga'
according to The Daily Telegraph (12/10).
Nobody could have foreseen the terror atrocities of 11 September, but
less than three weeks after the £437m bid was accepted, WPP chief
executive Sir Martin Sorrell announced an attempt to 'ditch Tempus'
(Daily Express, 13/10) as the shares slumped to well below the bid
price. The 'already faltering advertising market had been pushed off a
cliff', said The Independent (11/10).
Sorrell argued the subsequent fall in shares and diminished trading
prospects of Tempus following the attacks amounted to a 'material
adverse change' (MAC) - an obscure get-out clause rarely, if ever,
invoked - since the original offer.
Despite his oft-quoted statement that he was convinced about the
strategic merits of the merger, he was determined to convince the
Takeover Panel it should no longer go ahead on that basis.
This would be the 'first time ... that the MAC law had been tested in
this way' (thedeal. com, 15/10) and the media were waiting with baited
breath on the outcome of 'Stock Market history in the making' (Evening
The question of whether WPP would be successful in its plea to the
Takeover Panel divided analysts. Many considered it unlikely, but Neil
Carter, an analyst at Dutch Investment bank ABN Amro, gained creditable
column inches with his statement: 'If war isn't a "material change" I
don't know what is' (Independent on Sunday, 14/10).
Few had kind words about Sorrell, or 'Mack the Knife' as The Daily
Telegraph (12/10) described him. He had become a 'weasel to Tempus
shareholders' according to thedeal.com (15/10) and Jason Nisse wrote
that he had started 'wriggling like a landed salmon' (Independent on
Industry insiders would have chuckled at The Guardian's (3/10) comment
that Tempus chairman Chris Ingram, his long-term adversary, would be
'delighted if he paid too much for the company', a charge rarely
levelled at Sorrell over the years.
Analysis and commentary by Echo Research. More information can be found