WPP plays it cool over Grey watch

WPP investors are wary that the advertising group could be drawn into a £700m-plus bidding war for rival Grey Global.

Both WPP and French advertiser Havas have been given access to confidential data by Grey and will decide whether to bid over the next few weeks.

WPP (which closed down 8 1/2p to 508 1/2p on Friday) has fallen nearly 10% in a month on fears it might overpay for Grey.

But most investors trust chief Sir Martin Sorrell to walk away if the price is too high. It makes sense for him to peek at a rival's accounts, even if he has no intention of bidding.

Analysts at CSFB reckon WPP could nearly double Grey's 5.7% operating margin but warn: 'We are instinctively wary of the execution risks inherent with acquisitions in this sector.

'Our concerns are enhanced further given that this deal is by no means a strategic necessity.'

It still rates WPP shares a buy.