Nestle is among Tempus' clients

Havas Advertising of France and the UK advertising giant WPP both want to buy Tempus, an agency that plans and coordinates how and where to run advertising campaigns on behalf of multinational companies such as Nestle, Visa and Singapore Airlines.

Once the battle for Tempus is over, Tempus' rival Aegis Group is expected to be targeted by the loser, analysts said.

"Recent consolidation trends in media buying make Aegis look an increasingly likely takeover candidate," the investment bank ABN Amro said in a research note.

Rival bids

Two major global media buyers could emerge once the dust settles, and some analysts are already predicting the outcome.

WPP will come out on top as Havas withdraws and settles for Aegis, ABN Amro predicted.

That prediction came as Tempus confirmed that it was considering a counter bid from WPP, the world's largest advertising agency, which already owns a 22% stake in the agency.

In July, the Tempus' board of directors had recommended its shareholders to accept a 541p per share bid from Havas.

The rival WPP cash offer is reportedly in the region of 550-555p per share.

If successful, WPP is expected to merge Tempus with its own media buying arm The Media Edge, analysts predicted.

New giants

If instead Havas, the world's fifth-largest advertising agency, succeeds in its �425m bid, the French agency is likely to create the world's fourth-largest media buying agency by merging its Media Planning Group with Tempus.

If this happens, WPP will be the one targeting Aegis Group, analysts predicted.

"WPP is a natural to buy either Tempus or Aegis, and Aegis is seen as the cheapest and best thing around," said a UK dealer.

Tense relationship

A rejection of the presumed higher WPP bid appears unlikely, even though Havas has already received acceptances for its bid by the owners of 28% of the Tempus shares.

But Havas could raise its offer, receiving encouragement from the relationship between WPP's chief executive Sir Martin Sorrell and Tempus' founder and chief executive Chris Ingram.

The two do not see eye to eye, said analysts, after Sir Martin and WPP's 22% stake in Tempus was bought for about 200p per share from a disgruntled former executive, reportedly against the will of Mr Ingram.

But analyst believe Mr Ingram, who still owns 16% of the company, and other senior Tempus managers may have been mollified by tempting job offers from WPP.

Because WPP paid so little for its initial 22% stake, it can pay as much as 600p per share without diluting the company's total value, said Deutsche Bank analyst Patrick Kirby.

UBS Warburg's Neil Carter agreed, but insisted that "it needs to consider the opportunity cost of not selling its [existing 22%] stake to Havas for 541p rather than its book costs", that is the price it paid for the stake.

Share prices

Aegis shares rose almost 10% to 114p on the rumour before slipping back to trade at about 114p, 5.6% up on its opening price.

Tempus shares, which have traded above the Havas bid price ever since it was put forward, rose to 590p, then slipped back to 585p, a 0.42% rise.

WPP slipped about 3% while Havas fell about 5%.