Hostile British Suitor Sweetens Bid for JWT
The British marketing services firm that launched a hostile bid for the parent of J. Walter Thompson advertising agency said Monday that it would raise its bid by more than $50 million if a merger agreement with JWT Group is reached by Wednesday.
The London-based WPP Group said it was prepared to raise its $45-a-share bid to $50.50 a share to “bring about an immediate acceptance of our proposal and to put this extended period of instability behind JWT as quickly as possible.”
WPP also announced that it would launch a shareholder campaign to replace JWT’s 11-member board with six WPP nominees if the JWT board rejects its new offer. The British firm now owns nearly 5% of JWT shares.
Will Meet Today
In New York, a spokesman for JWT Group said the company’s board planned to meet on Tuesday to review the new offer and “all other options.” JWT, which also owns the Hill & Knowlton public relations firm, was said to be talking with prospective buyers outside the ad business.
However, investment analysts who follow the advertising industry doubted a higher bid would emerge now. “This is a preemptive offer,” said Andrew Wallach, an analyst with the Paine Webber investment firm in New York. “I don’t see how JWT can reject it.”
Wallach said that he is advising clients to sell JWT shares since he doesn’t think the price will go much higher. JWT shares closed at $52, up $1.37 1/2 in composite trading Monday on the New York Stock Exchange. The share price has increased by $12.75 since WPP Group made its offer on June 10.
The run-up in JWT’s share price suggested that speculators, who now hold around 40% of JWT’s shares, expect a higher bid to emerge. WPP has lined up enough financing to pay $53 a share.
JWT has such blue-chip clients as Ford Motor Co., Kraft Inc., Kellogg Co., Warner-Lambert Co. and International Business Machines Corp. The WPP Group’s new offer for JWT was valued at $485 million, or $515 million with the conversion of stock options.
WPP’s chief executive, Martin S. Sorrell, said previously that he planned to operate JWT intact. Analysts said WPP didn’t need to sell some of JWT’s operations to pay a higher price. “If he (Sorrell) cuts overhead and closes a few offices around the world, he can probably hold it together,” said analyst Wallach. “But he’s not going to get the profit he expected out of it.”
‘Head Hunter’ Calls
A spokesman for WPP said the firm offered to raise its bid to end the uncertainty about JWT’s future so the company’s employees won’t switch jobs. “Obviously, some of their people must be getting calls from head hunters and we don’t want them to leave,” the WPP spokesman said.
JWT, which reported a loss for the first quarter, has been beset by management turnover since January, when several of its top executives were let go in a shake-up. One of those executives, Jack E. Peters, would return to JWT as president and chief operating officer and would receive a $500,000 annual salary through 1992, according to an SEC filing by WPP. Peters stands to receive $1.3 million if WPP’s bid fails.
