The WPP offer represents a premium of 14p on the Havas offer of 541p a Tempus share and 54% on the closing price of 360.5p a share on July 18, the day before Havas first launched its bid.
As widely predicted, WPP proposes to merge CIA, Tempus's media-planning and buying business, with The Media Edge, part of Young & Rubicam, to create the world's fourth-largest media-buying network. Tempus's branding, identity and design division will join with WPP's existing branding, identity, design and strategic marketing consultancy businesses.
WPP has also announced that if a bid should succeed, Chris Ingram, CEO of Tempus, will be invited to become co-chairman of Group MindShare Edge, the WPP division which houses its two media-buying networks, MindShare and The Media Edge.
WPP currently owns approximately 22% of Tempus, bought earlier this year at an average price of 240p a share. If successful, WPP's average cost per Tempus share will be 450p and its total cost of investment will be approximately £385m.
If, as expected, Havas counter-bids for Tempus later today, it will cost Havas a lot more than it wants to pay. However, if it wants to move into the major leagues in terms of media buying, it might have to bid or miss its chance.
WPP says it has identified cost savings of at least £13m and expects the transaction to be earnings-enhancing in the first full financial year following completion of the acquisition.
Sir Martin Sorrell, group chief executive of WPP, said, "We believe the strategic and financial benefits of combining CIA with the Media Edge are compelling. The two businesses are highly complementary philosophically and will create a worldwide, geographically balanced network and a much-enhanced client offering."
He added, "We anticipate substantial synergies to be generated from this combination. This, coupled with our blended acquisition price of 450p per share, will enable us to generate an attractive return for our shareholders."
The Tempus board, which originally gave its full backing to Havas's original bid of £425m last month, is now reported to be considering withdrawing its recommendation and auctioning the company to the highest bidder.
Speaking to the Sunday Times yesterday, Havas chairman Alain de Pouzilhac said, "We've made an offer, a unique offer, and if another should arrive we will react. The important thing is that this is a unique opportunity for Havas and Tempus to create the fourth-largest media network in the world. More than that, we have a perfect geographical fit and the same cultures."
If Havas does react to this morning's WPP bid as it has indicated, it will have to bid close to 600p to win shareholders over. This is a lot more than the French group wants to pay.
Sir Martin and Ingram have held talks and these appear to have been productive. For a start, the antipathy that Ingram has previously had to any WPP bid seems to have softened. Ingram told the Sunday Times, "A lot of people thought that the Havas offer was a full price and so did we, frankly. If there are other offers on the table that are an improvement, we are very interested."
This is believed to be a reference to the talks that Sir Martin and Ingram have held. Ingram told the paper that if WPP puts enough daylight between the bids then "we will recommend it".
However, what has intrigued some is the value of the WPP offer. Analysts were surprised that it was only 3% up on the 541p Havas bid. This has led some industry watchers to speculate that Sir Martin's intention, by not making a deal-clinching bid, has been to drive up the price Havas must eventually pay for Tempus all along. And if WPP really wants Tempus, and owning 22% of Tempus as it already does, Sir Martin can certainly afford to go higher than the 555p.
Either way, WPP and Sir Martin win. If Havas comes back with a 600p offer, that would give WPP a healthy profit on its 22% investment and maybe give it extra cash to bid for the bigger prize of Aegis -- the rival and much larger UK media-buying group.
Aegis is valued at close to £1bn. WPP and Aegis have consistently denied that they are interested in either selling or buying. However, there is no denying that Aegis's Carat group would make a finer prize.