GfK, the German market research group vying for control of Taylor Nelson Sofres (TNS), its British rival, with WPP, has dropped its plans to bid for TNS after a breakdown of talks with Apax Partners, its financial backer.

After a series of discussions over the weekend, the German group’s board yesterday decided not to table a bid for TNS. It is thought that GfK did not agree to the terms that were set by the private equity group, particularly over governance issues.

It is understood that GfK could announce as early as today that talks with its potential backers have ended.

The end to the discussions between GfK and Apax brings WPP Group, run by Sir Martin Sorrell, a step closer to winning the assets. WPP, the world’s second-largest advertising group, dashed an agreed all-share merger between GfK and TNS last month with a higher hostile bid made up of cash and shares. The Times revealed then that GfK was considering tabling a cash bid for TNS, a move that the German company confirmed.

Sir Martin said that he believed GfK would not be able to raise the funds for a bid in current market conditions and said last week that the Takeover Panel should force GfK to clarify the status of its potential bid.

Uncertainty about GfK’s bid came on Friday after the group refused to confirm that its original financial backer for a bid was still in place.

A GfK spokesman said on Friday: “GfK was all set for a nil-premium merger with TNS until Sorrell barged in and changed everything. GfK needs time to realign its troops.

“This takes time and we are not in the easiest climate at the moment. We are in talks with serious and important investors and these talks are progressing very well. We will make an announcement at the right time.”

GfK’s statement on July 9 said: “GfK is actively pursuing a proposal, which would involve an alternative all-cash offer being made for TNS with the involvement of an identified potential source of equity and equity-related financing.”

GfK is understood to have had the backing of the Herz family, of Germany. However, talks with the family, which is behind Tchibo, the German conglomerate, are understood to have collapsed. It is thought that the Herz family was the financial backer that GfK was referring to in the July 9 statement.

“GfK’s original statement regarding the financing of a bid for TNS should have been modified to clarify its situation,” a WPP spokesman said.

The final acceptance date for WPP’s offer is this Friday. GfK, TNS and WPP last night refused to comment.

TNS will today report half-year figures, which analysts expect to show that Europe has remained firm, offsetting results from a weaker United States.

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