TNS has pushed ahead with its plans to merge with German market research rival GfK in what it says is a 'merger of equals', after spurning the overtures of Sir Martin Sorrell and his WPP Group.
The new company will be called GfK-TNS and will create a major pan-European force in the market research industry, which will have a strong position in a number of fast-growing emerging markets. GfK has strength in Central and Eastern Europe while TNS is better developed in Asia Pacific. Overall the combined business will have operations in 111 countries. The market research firm will be the world's second biggest after the Nielsen Company in the US. It will have its global head office in London, its German head office will be in Nuremberg, and it will have its primary listing on the London Stock Exchange with a secondary listing in Frankfurt.
TNS and GfK have said the merger will create a number of opportunities to boost revenue growth, with the rolling-out of existing market research products and services across the extended network. The merger will also create new services from shared expertise and integration of the business. It is expected that the merger will create cost savings of around £76m by the end of the third full year following the completion of the deal. Following the merger, the GfK-TNS board will be chaired by Hajo Riesenbeck. Donald Brydon will become the senior independent director and the executive directors will be led by chief executive David Lowden.
Dr. Klaus Wubbenhorst, currently chief executive of GfK, will join the GfK-TNS board as a non-executive director and the representative of GfK-Nurnberg e.V., GfK-TNS' largest shareholder following completion of the merger with a holding of 28.7%. The two companies first announced they were in merger talks at the end of April and TNS fought off two offers from Sir Martin Sorrell and WPP. The second on May 14 was valued at £996m.
In 2007 the combined group would have had combined revenues of £1.9bn and EBITDA of £265.8m. Both GfK and TNS achieved more than 5% underlying organic revenue growth in the first quarter of 2008 and at the end of April 2008, the order books of the companies were said to be ahead of the previous year. It is expected that the merger will be completed during the last quarter of 2008.