The Tempus statement comes in response to WPP's submission to the Takeover Panel about a possible move to abandon the deal. Earlier this week, WPP extended its bid until October 22 while it continues talks with the city regulator to invoke the material adverse change condition.
Tempus said it had now seen the WPP submission to the Takeover Panel and is now firmly of the view that "there are no grounds for allowing the material adverse change condition to be invoked". It said it made a formal submission to the Takeover Panel late yesterday, setting out the reasons why it is firmly against the view that there are grounds for invoking the material adverse change clause.
WPP is arguing that the situation has significantly worsened since the events of September 11. However, it is seen as unlikely that the Takeover Panel will accept WPP's argument, which is likely to centre on the tumbling value of advertising and media stocks.
For the argument to be successful, the Takeover Panel will have to see evidence that profits are set to dive at Tempus by at least 20%. Analysts are suggesting that Tempus may be down by only 10%.
Earlier this morning, investment bank Morgan Stanley cut its earnings expectations ahead of WPP's third-quarter results, which are due out next week.
Analysts are looking to WPP as the first real indicator of the weakness of the advertising market following the terrorist attacks on the US last month. Morgan Stanley has reduced its earnings-per-share 2001 estimates by 6% to 29.5p from 31.3p and cut its estimates for 2002 to 28.9p from 35.3p.
The cut in expectations has been made assuming that WPP's acquisition of media-buying group Tempus does not go ahead. In the event that the deal goes ahead, Morgan Stanley sees the situation as being made worse, impacting further on already weak earnings for next year.
This morning WPP's shares were trading up 3.69% at 547.5 having opened at 528p. Tempus shares were also up rising 1.01% to 502.5p. Tempus shares have moved up steadily over the last few days rising from 490p last week where they had stood for sometime. It's stock is gradually closing the gap on WPP's offer price of 555p a share.
At the weekend, it emerged that shareholders in Tempus have threatened WPP with legal action if it attempts to abandon the £432m bid to buy the company.
WPP has already asked to see Tempus's books, but Chris Ingram, the Tempus CEO, has refused to hand over the information. Tempus may, however, hand this data to the Takeover Panel to help it make its decision.
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