US rivals square up to Sorrell

SIR Martin Sorrell's WPP advertising group now faces a joint bid from two leading venture capital firms in the race to acquire American advertising firm Grey Global.

Offers are likely to top £800m and a decision is expected this weekend.

WPP and venture capital groups, Hellman & Friedman and Kohlberg Kravis Roberts, are believed to be the remaining contenders.

This is because the third bidder in the auction, France's Havas, is unlikely to be able to match the bids of the other two groups.

French businessman Vincent Bollore, who is against Havas's plans to buy Grey, is also understood to have raised his stake in Havas from 5% to more than 10%.

The Grey board, led by chairman and chief executive Ed Meyer, met on Saturday in New York to consider the bids.

Meyer, 77, who has been with Grey since 1956 and controls about 70% of the voting shares, is in line to collect about £20m in cash if the company is sold.

But he is obliged to act in the interests of all shareholders in the business. Offers for Grey, where the key client is Procter & Gamble, were submitted last Wednesday, but Sorrell, chief executive of WPP, is understood to have subsequently raised his initial offer, worth £500 a share.

So, too, did the two venture capital groups, which had initially submitted an all-cash offer of £488 a share. The venture capital groups are believed to be backed by funds from banks Lehman Brothers, Bear Stearns and Citigroup.

While the bulk of WPP's offer is in shares, it is thought that the British group is prepared to be flexible in its approach, which could mean it would increase the cash element of the bid.

WPP is also understood to be prepared to retain the services of Meyer, who wishes to remain with Grey even after it is sold.

None of the parties involved would comment.