GfK has responded to WPP's £1.082bn hostile takeover bid for Taylor Nelson Sofres by ditching its own agreed "nil premium" merger offer and seeking extra funding for a renewed tilt at the market research company.

The German market research company said today that in light of WPP's hostile bid it agreed to "terminate" its proposed merger with TNS to "pursue an alternative proposal", raising new money from an unnamed source.

"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," the company said.

"While negotiations are at an early stage, GfK has received a strong indication of interest in this transaction. The form of consideration being considered is all cash, although the formal right to vary this is reserved."

GfK's announcement came following WPP chief executive Sir Martin Sorrell's hostile bid, tabled early today in line with the "put up or shut up deadline" set by the London Stock Exchange takeover panel.

WPP's new 260.6p-per-share offer has once again been rejected by TNS, which has previously rebuffed Sir Martin's overtures as it pursued an agreed takeover by GfK.

Donald Brydon, the TNS chairman, said: "The board has unanimously rejected the offer which substantially undervalues TNS. Shareholders should take no action and should not complete any form of acceptance in connection with WPP's offer."

TNS added in a statement: "In light of this rejection, TNS has agreed with GfK to terminate the proposed merger and has permitted GfK to advance its discussions with an identified potential source of equity and equity-related financing in connection with an alternative possible offer for TNS as an alternative proposal."

GfK has been reported to have an unnamed financial backer that will enable it to table a sweetened 280p-per-share offer for TNS.

It is thought that WPP is not willing to pay that much money to take over TNS.

WPP has claimed that combining TNS with its own market research arm, Kantar, would create savings of more than £50m a year.

TNS has moved to "adjourn indefinitely" its general meeting, scheduled for July 18, to give GfK time to table a new deal.

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