Sir Martin Sorrell’s fingernails are down to the quick!
The European Commission today dashed his hopes it would veto WPP Group’s agreed £434 million ($625m) takeover of Tempus Group – leaving its validity in the hands of Britain's Takeover Panel.
The panel will rule today (Tuesday) or tomorrow whether it accepts WPP’s submission that its £5.55 per share bid is now null and void on grounds of “material adverse change” in Tempo’s business – which like all advertising enterprises has suffered in the wake of the September 11 tragedy. Now that the takeover has received the EC’s blessing, such a ruling is Sir Martin’s sole chance of exiting from a deal WPP no longer wants – nor, some say, can afford.
Industry onlookers believe WPP’s argument to the panel is fatally weakened by its open market purchase of an additional three per cent of Tempus shares a full week after the US terrorist attacks – with the wisdom of hindsight a possibly terminal error on the part of Sir Martin and his advisors.
Certainly, if WPP is saddled with a costly acquisition at a [now] inflated price in the current advertising bear market, investors and analysts are likely to question Sorrell’s sudden onrush of fallibility.
The markets also await WPP’s quarterly trading statement, scheduled for Thursday. No profit warning has been issued, so its Q3 numbers are unlikely to engender market panic. But analysts’ crystal balls predict a sharp slowdown in profits growth and the seers have reduced their consensus estimate of full-year pre-tax earnings from £540m to £490m.
News source: Financial Times