WPP will not make a pure cash offer for market research group Taylor Nelson Sofres (TNS), it has emerged ahead of the advertising giant’s put up or shut up deadline to make a firm bid or walk away.

Sir Martin Sorrell, the chief executive of WPP, posted an indicative 260p a share offer last week, but must decide whether to make a formal offer by the Takeover Panel’s deadline of July 9. The board of WPP is understood to be meeting late tonight to discuss the group’s next move, but a pure cash offer is unlikely.

The advertising group gave an undertaking in an announcement earlier in the process that, if it made an offer for TNS, it would structure it in such a way as to ensure it would not jeopardise its credit rating. It is thought that the group believes that a cash-only offer could impact its credit rating.

The improved indicative bid, made up of 173p in cash and 0.1889 of a WPP share for each TNS share, valued TNS’s equity at £1.08 billion at WPP’s closing share price last Wednesday of 460.5p.

It is understood that WPP has been seriously considering putting an offer directly to TNS shareholders.

However, some TNS shareholders have expressed concern about the shares element of WPP’s proposal, as WPP’s share price has fallen in recent weeks on concerns about the economic climate. WPP shares, which closed at 626p on May 2, last night closed at 464p.

One leading shareholder, who refused to be named, said last week that it would like to see WPP table an offer closer to 300p, although it may consider an offer at about 280p.

However, there was mixed views regarding WPP’s last approach of 260p. Some analysts said that the WPP offer represented a fair price for shareholders and a premium of 52 per cent on TNS's undisturbed share price of 171p.

Collins Stewart said in a note that the approach represented an “excellent deal for TNS shareholders”, whose share price has been propped up by the possibility of a WPP offer. Some hedge funds invested in TNS are thought to have shown suppport for WPP's offer.

WPP wants to merge TNS with Kantar, its own market research unit, to become the second-largest market research group after Nielsen. The combined group would have estimated combined revenues of $4 billion (£2 billion), doubling Kantar's $1.9 billion figure for 2007.

TNS is currently also in merger discussions with its German rival GfK. It also emerged today that RiskMetrics, the provider of risk management and corporate governance products and services to financial services groups, has recommended that shareholders of Taylor Nelson Sofres (TNS) vote against a proposed merger with German competitor GfK, based on valuation,contract and corporate governance concerns and the presence of a conditional takeover offer from UK competitor WPP.

An announcement from WPP is expected at about 7am tomorrow.

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