Appeal to U.K. Panel Cites Impact of U.S. Terrorist Attack

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LONDON (AdAgeGlobal.com) -- The U.K.'s Takeover Panel is likely to decide in about a week whether to allow WPP Group to pull out of its $630 million bid for Tempus Group -- but if either side appeals the decision, the process will drag on.

  WPP made a formal submission to the panel today seeking to invoke the "material adverse change" clause in its original bid for the U.K. media buying group. In the meantime, WPP will extend its offer, due to expire on Oct. 15, for another week while the panel examines the deal.

'Material adverse change'
WPP's Board said that while it still believes in the "strategic merits of combining WPP and Tempus," there has been a "material adverse change in the prospects of the Tempus Group" since the company's offer and since the Sept. 11 attacks on the U.S.

As of late afternoon London time, WPP's share price had risen to 547 pence, up 1.5% from its close on Tuesday. Tempus' share price slid 465 pence, down 4.6% from the previous day and well below WPP's offer of 555 pence per share of Tempus stock. An overwhelming majority of Tempus shareholders, 93.9%, had accepted the offer.

Few others have succeeded
WPP is moving into uncharted territory with its petition to withdraw the $628 million offer. Few bidders have successfully convinced the takeover panel to let them walk away from an offer due to a material change.

WPP's case may not be helped because on Sept. 18, a week after the terrorist attacks in the U.S., WPP bought 2.37 million more shares in Tempus at 555 pence for an additional 3% of the company.

A formal submission was made today to the panel.

WPP will try to argue that it bought the additional 3% stake merely as a strategic move to boost its Tempus holding to 25%. In the U.K., a 25% shareholding gives a company a blocking stake, preventing the majority shareholders from making unfriendly moves such as a massive issue of new stock. 

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