The British firm Taylor Nelson Sofres (TNS) and its German rival GfK are in talks that could lead to a merger of the two market research giants and create the world’s second largest market information group.

Shares in TNS, which has a market capitalisation of £821 million, rose 28p to 199p on the news. The joint company would have a value of more than £1.5 billion.

It is understood that the combined group will be called GFK-TNS. It will have its primary listing in London and a listing in Frankfurt.

David Lowden, TNS chief executive, would become chief executive, and Hajo Riesenbeck and Donald Brydon, who chair GfK and TNS respectively, are set to become co-chairman, with Mr Brydon stepping down at the group's 2010 AGM.

TNS is currently number three by revenue in market research, with Nielsen the industry leader. GfK is in fifth position.

The groups said in a statement: “The boards of the two companies believe that a merged GfK and TNS would be positioned to capitalise on the global opportunities in the market information industry with specific expertise in the consumer, technology, media and healthcare sectors.

“Post-merger, the combined group would be able to deliver a greater range of value-added solutions more effectively to all its clients.”

GfK-Verein, currently the largest shareholder in GfK, would be the largest shareholder in the merged group, with a shareholding expected to be around 28 per cent.

Mr Lowden said: “The market has long seen these two companies as ideal partners and now is the right time to bring them together.

“This is a partnership that would create a global leader across our market sectors bringing new capabilities and value to our clients through the combination of strong syndicated and custom services. The merger would also create substantial value for both sets of shareholders.”

The global head office of GfK-TNS would be based in London and a German office with significant business operations would be based in Nuremberg.

Steve Liechti, an analyst at Investec, said in a note: "The key opportunity would be in custom research businesses where significant cost synergies and possibly revenue should be possible – we think this should be a prime area of cost saving."

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