WPP faces bidding war with Havas

ADVERTISING firm WPP is apparently heading for a bidding war with French rival Havas to acquire New York-based Grey Global Group.

'We are interested in Grey because it makes sense strategically and financially,' Havas chief executive Alain de Pouzilhac told Bloomberg. He would not comment on price.

De Pouzilhac said Havas, which has suffered from an ad recession, would team up with financial partners in a possible bid for Grey, which has hired Goldman Sachs and JP Morgan Chase to explore a possible sale.

Britain's WPP Group, the world's second-largest advertising agency, is also reportedly considering a bid, although it is yet to confirm that.

France's Publicis has ruled itself out of the running, although it has said it would be interested in some of Grey's businesses. That would be unacceptable to Grey, which has made clear it will not to allow itself to be dismembered after the sale.

WPP is understood to be willing to swallow the company whole.

Grey, which is controlled by chairman Ed Meyer, has a market value of about $1.2bn (£650m), a price that still leaves WPP as the most likely winner in any contest with the highly-leveraged Havas.

But de Pouzilhac dismisses fears that, with net debt of e642m (£424m) and e566m of convertible bonds due in 2006, its pockets are not deep enough.

He told Bloomberg: 'People in the market say Havas doesn't have the financial means, but we do because we have financial partners. We are not irresponsible. We will look at it and, if we are interested, we will solve the convertible bonds issue before that.'