Tempus attacks WPP exit attempt

WPP's Sorrell: 'typically audacious move'

Media buyer Tempus has hit out at the world's biggest ad agency group WPP, which is attempting to back out of a £434m takeover deal.

WPP got cold feet within days of having its 555p per share cash offer for Tempus accepted.

It claimed the 11 September terror attacks on the US had made a poor advertising market even worse, decimating Tempus's market value.

Normally, WPP would have no choice but to proceed with the deal.

But in a highly unusual move, it made a submission to the Takeover Panel, citing an "adverse material change" in Tempus's prospects.

'No grounds'

Now Tempus has hit back, claiming WPP has no valid reason for backing out of the deal.

In a statement issued on Wednesday, Tempus said it had seen WPP's submission to the Takeover Panel and it did not accept the company's argument.

"The board of Tempus is firmly of the view that there are no grounds for allowing the material adverse change condition to be invoked," Tempus said.

'Long shot'

Some observers have called WPP's attempt to back out of the Tempus deal a "long shot".

It presents a new challenge for the Takeover Panel, a self-regulatory body set up by the City to adjudicate on merger and acquisition disputes.

A general downturn in economic conditions is not normally deemed by the panel as sufficient reason to allow a company to withdraw an announced takeover offer.

Companies normally need to prove that there have been "circumstances of an exceptional and specific nature".

But, City lawyers argue, the relevant rules normally apply to companies that have not yet made a formal offer, which does not apply to WPP.

The case is being seen in the City as a typically audacious move by WPP's combative chief executive Sir Martin Sorrell.

But the fact that WPP bought further shares in Tempus on 17 September, after the terrorist attacks in the US, will not help its case, lawyers say.

Ruling expected

Although the Takeover Panel has no statutory power, it can publicly censure financial institutions acting as advisers to companies involved in mergers, and this can put future takeover deals at risk.

The panel is expected to make an initial statement on the WPP case in the next few days.

Sir Martin Sorrell can appeal against the panel's decision and, if that fails, he can ultimately take the case to a judicial review.

WPP is not the only company to get cold feet over a takeover since 11 September.

French construction group Vinci has pulled out of its £517m bid to buy British airport group TBI.

In the City, WPP shares closed up 10p at 538p, and Tempus added 10p to 507.5p.