Market researchers Taylor Nelson and GfK to merge

The companies said the deal will generate annual cost savings of around 97 million euros ($150 million) after the third year, with a one-off cost of 120 million euros ($185 million).

Analysts said, however, the deal might yet be gatecrashed by WPP Group PLC, the world's No. 2 advertising company, which has already made three unsolicited bids for Taylor Nelson.

Taylor Nelson and GfK said the merger will be done by exchanging 11.74 new TNS shares for each GfK share.

TNS shareholders and GfK shareholders will each hold about 50 percent of the share capital of the merged GfK-TNS following the deal's completion, expected in the last quarter of 2008.

David Lowden, Taylor Nelson's chief executive officer, will be CEO of the combined company.

He said the merger would enable the new group to extend coverage across 111 countries. Gfk has a strong presence in Central and Eastern Europe, while TNS dominates in Asia.

"The new business we are creating will be a global leader in the market information industry," Lowden said. "We believe that this merger will also create substantial value for both sets of shareholders."

Analysts said that WPP, which has said there is a "powerful" logic in combining Taylor Nelson with its Kantar research unit, may come back with an offer higher that its early May approach of 154 pence in cash and 0.1214 WPP shares for each TNS share.

Taylor Nelson's shares rose 1.4 percent to 259.5 pence ($5.10) on the London Stock Exchange.