17th May 2007 12:59
WPP Group PLC17 May 2007 FOR IMMEDIATE RELEASE 17 May 2007 WPP HAS AGREED TO ACQUIRE 24/7 REAL MEDIA FOR $11.75 PER SHARE •WPP has agreed to acquire 24/7 Real Media, a leading global digital marketing company quoted on NASDAQ, for $11.75 per share valuing 24/7 Real Media at $649 million •Reported revenues for 24/7 Real Media for the 12 months ended 31 December 2006 were $200 million, up 43% on prior year •The management team of 24/7 Real Media will develop the business within WPP and rollover unvested equity interests •Acquisition will strengthen WPP's position in the rapidly-growing digital marketing industry enhancing the Group's position in search marketing, digital media and adding strong technology skills €24/7 Real Media is headquartered in New York and operates in 12 countries throughout North America, Europe and Asia-Pacific WPP Group plc ("WPP" or the "Group") has entered into a definitive agreement toacquire the entire share capital of 24/7 Real Media Inc. ("TFSM") for $11.75 pershare by way of an all cash tender offer. The acquisition values 24/7 Real Media at approximately US$649 million,equivalent to approximately 3% of WPP's market capitalisation on 16 May 2007. The cash consideration payable to TFSM share owners will be US$637 million andwill be financed in cash from existing resources and debt facilities. Unvestedstock and options are valued at US$49 million and net cash is expected to beapproximately US$37 million at closing, to value TFSM at US$649 million. Rationale for the Offer WPP is committed to delivering added value to its clients, its share owners andits people, by continuing to be a significant force in the global advertisingand marketing services industry. This will be achieved by providing local,regional and multinational clients with comprehensive solutions to reach theircustomers, build their brands and enhance their market positions and bydeveloping superior service capabilities in a cost effective manner. WPPcontinues to believe that access to strategic advice, creativity, high qualityinformation and specialist communication skills is critical to providing clientswith comprehensive advertising, media investment management and marketingservices solutions. Online advertising will exceed $33 billion in 2007 or more than 8% of globaladvertising spend, based on GroupM estimates. This is expected to continue togrow strongly in the future, particularly as traditional media increasinglyembraces and develops digital channels. The Board of WPP believes thattechnological capabilities and skills, combined with the Group's understandingof client demands and media, will play an increasingly important role inproviding the best solutions for our clients. TFSM is a leading company in the global digital marketing industry. Its businessspans three key sectors in the rapidly-changing digital media industry - media,search and technology: • its media business is one of the largest CPM-based media networks with more than 950 participating sites and 115 million monthly unique users worldwide. • its search business provides clients with strategic advice and consulting on search engine optimisation (SEO) and search engine management (SEM) for Google, Yahoo! and MSN as well as other search engines and shopping comparison services. • its technology business offers the number 2 publisher-side advertising management platform to more than 400 clients. TFSM has shown strong organic growth, up 43% in 2006. The company has over 400people in 20 offices in 12 countries and a strong presence outside the UnitedStates, including Asia. The TFSM team has long experience in the industry andhas developed one of the most sophisticated and robust internet technologyplatforms, that has enabled the business to deliver strong revenue growth,particularly in 2005 and 2006. The combination of TFSM and WPP will enhance the enlarged Group's assets andcapabilities in digital marketing, delivering benefits to clients from theGroup's enhanced technologies. Specifically it will: • bring critical technology assets, people and skills to the enlarged Group, which are increasingly important as digital media develops • open up opportunities for the Group to enter new businesses by adding new capabilities in online media • strengthen WPP's position in the SEM area, increasing search spend under management by $200 million, taking search volumes to more than $450 million and adding a robust technology platform for managing search • add digital revenue in Asia through its presence in Korea, Australia and Japan. The Board of WPP believes there are significant opportunities for furtherdeveloping the Group's skills in our digital and direct marketing networks, ourmedia investment management businesses and our information, insight andconsulting companies. Overall, the acquisition will contribute to all of WPP's three strategic goals;adding to our revenues in Asia, increasing the contribution from marketingservices and the share of revenue from quantifiable marketing services. Commenting on the announcement, Sir Martin Sorrell, CEO, WPP, said: "Our clientsand therefore our industry are becoming more media and technology driven. 24/7Real Media significantly enhances our capabilities, technological resources andtalent, as well as adding to our geographic coverage and our measurable skills." David J. Moore, Chairman and CEO of 24/7 Real Media, said, "This transactionwill greatly strengthen our product offerings and will be highly beneficial toclients of both companies. 24/7 Real Media will remain the largest,publisher-focused technology company in the sector, with the second largestinstalled base of ad serving technology clients globally, and working as part ofWPP will be a tremendous benefit to our ad serving and Global Web Allianceclients. We look forward to working with WPP to leverage our award-winningDecide DNA(R) search engine marketing platform and our other technologies tocreate the leading advertiser technology offering in the marketplace." Financial Impact In the short term, the Board of WPP expects the transaction to be marginallydilutive to earnings (circa 1%) in 2007 and 2008. Cost savings of £2.5million($5million) have been identified from public company and worldwide and regionalinfrastructure. In the longer term, the Board expects that greater exposure to faster growingdigital markets and revenue synergies from the combination of the capabilitiesof 24/7 Real Media and WPP, will increase the Group's longer term organic growthrate in terms of both revenues and earnings.(*) WPP's 2007 operating profit margin target will remain at 15%, including thisacquisition. The enlarged Group's longer term margin goals remain unchanged at15.5% for 2008 and 16% for 2009. (*) The statements in this paragraph should not be interpreted to mean that theearnings per share will necessarily be greater than those for the relevantpreceding financial period. Management and People The TFSM businesses will continue to be run by its existing management withinWPP, as part of WPP Digital, WPP's separate vertical which invests in digitalmarketing and media. It is anticipated that strong operational links will beestablished with GroupM, WPP's media investment management parent company andwith Kantar, WPP's information, insight and consultancy parent company. WPP believes that both TFSM and WPP's people will benefit from the enhancedcareer opportunities available within the enlarged WPP. David J. Moore, Chairman/CEO, Jonathan Hsu, COO/CFO and Oleg Vishnepolsky, CTOwill continue in their current roles, working to develop 24/7 Real Media and theGroup's digital business. All unvested options and restricted stock of thesenior management team will roll over into WPP stock on similar terms, uponcompletion of the transaction. Information on TFSM TFSM is a leading global digital marketing company, founded in 1995. As of 31March 2007, TFSM employed over 400 people worldwide and operated in threesegments. Media Solutions includes a large CPM-based media network, with over950 sites and more than 115 million monthly unique users worldwide. SearchSolutions includes a leading Search Engine Marketing (SEM) business, with over$200 million search billings under management. Technology Solutions is thesecond leading publisher-side advertising management platform with over 400clients across the world. The company also has a comprehensive SEM partnershipwith Dentsu in key fast-growing Asian markets. In April 2007, Advertising Ageranked TFSM in the top 10 Ad Networks on the Internet. The company isheadquartered in New York, with 20 offices in 12 countries throughout NorthAmerica, Europe and the Asia Pacific region. Other information Within 10 business days of the date hereof, WPP intends to commence a tenderoffer for all of TFSM's outstanding common stock. The offer is conditioned uponat least a majority of the outstanding TFSM shares, determined on a fullydiluted basis (computed in accordance with the merger agreement), beingtendered, as well as the satisfaction of regulatory and other customaryconditions. Approval of the transaction by WPP shareholders is not required. Itis currently expected that the transaction will be completed around July monthend. Information on WPP WPP is one of the world's leading communications services groups. Through itsoperating companies it provides a comprehensive range of communicationsservices. These services include: advertising; media investment management;information, insight and consultancy; public relations and public affairs;branding and identity, healthcare and specialist communications. The Companyemploys approximately 100,000 people (including associates) in 2,000 offices in106 countries, providing communications services to more than 300 of thecompanies that comprise the Fortune 500, over one half of the companies thatcomprise the NASDAQ 100 and more than 30 of the companies that comprise theFortune e-50. As of 16 May 2007, WPP had a market capitalisation ofapproximately £9.3 billion (US$ 18 billion). Important Information This press release is for informational purposes only and is not an offer to buyor the solicitation of an offer to sell any of the TSFM's common shares. Thetender offer described herein has not yet been commenced. On the commencementdate of the tender offer, an offer to purchase, a letter of transmittal andrelated documents will be filed with the Securities and Exchange Commission,will be mailed to shareholders of record and will also be made available fordistribution to beneficial owners of common shares. The solicitation of offersto buy the TSFM's common shares will only be made pursuant to the offer topurchase, the letter of transmittal and related documents. When they areavailable, shareholders should read those materials carefully because they willcontain important information, including the various terms of, and conditionsto, the tender offer. When they are available, shareholders will be able toobtain the offer to purchase, the letter of transmittal and related documentswithout charge from the Securities and Exchange Commission's Website atwww.sec.gov or from the information agent that WPP selects. Shareholders areurged to read carefully those materials when they become available prior tomaking any decisions with respect to the tender offer. Forward-looking Statement This release and the conference call announced in it includes statements thatare, or may be deemed to be, "forward-looking" statements. These forward-lookingstatements can be identified by the use of forward-looking terminology,including inter alia the terms "believes", "plans", "expects", "may", "will" or"should" or, in each case, their negative or other variations or comparableterminology. These forward-looking statements include matters that are not historical factsand include statements regarding WPP's intentions, beliefs or currentexpectations concerning, among other things, WPP's results of operations,financial condition, liquidity, prospects, growth, strategies, the outlook forrelevant markets and the proposed acquisition of TFSM. By their nature,forward-looking statements involve risk and uncertainty because they relate tofuture events and circumstances. A number of factors could cause actual resultsand developments to differ materially from those expressed or implied by theforward-looking statements. Forward-looking statements may and often do differmaterially from actual results. Any forward-looking statements in this releaseand the conference call announced in it reflect WPP's view with respect tofuture events as at the date of this release and the conference call announcedin it and are subject to risks relating to future events and other risks,uncertainties and assumptions relating to WPP's operations, results ofoperations, growth strategy and liquidity. Save as required by relevant law or regulation, WPP undertakes no obligationpublicly to release the results of any revisions to any forward-lookingstatements in this release or the conference call announced in it that may occurdue to any change in its expectations or to reflect events or circumstancesafter the date of this release or the conference call announced in it.Information in this release and the conference call announced in it should notbe relied upon as a guide to future performance. Conference Call A conference call will take place at 9.30 AM (US) and 2.30 PM (UK) Dial in details are: US Dial-in No +1 210 795 0472US Dial-in Toll Free +1 877 818 6787UK Dial-in No. +44 (0)20 7019 0812UK Dial-in Toll Free 0800 018 0795 A copy of the presentation will be available at www.wpp.com Further information: Sir Martin Sorrell, WPP )Paul Richardson, WPP ) +44 (0)20 7408 2204Feona McEwan, WPP )Richard Oldworth, Buchanan +44 (0)20 7466 5000 www.wpp.com Goldman Sachs , which is authorised and regulated in the United Kingdom by theFinancial Services Authority is acting as financial advisor and has providedfinancial advice in relation to the acquisition to WPP Group plc and no one elsein connection with the acquisition and will not be responsible to anyone otherthan WPP Group plc for providing the protections afforded to clients of GoldmanSachs or for providing advice in relation to the acquisition. Fried, Frank, Harris, Shriver & Jacobson LLP, Davis & Gilbert LLP and Allen &Overy LLP are acting as legal counsel to WPP Group plc in connection with thetransaction.. Merrill Lynch is acting as broker to WPP Group plc.-------------------------- This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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