UPDATE 2-With rivals focused on merger, WPP thumps forecasts
* 5 pct organic growth beats 3.8 pct forecast
* Q3 performance beats merging Omnicom and Publicis
* WPP shares up 2 percent
LONDON, Oct 24 (Reuters) - WPP, the world's largest advertising company, posted third-quarter organic revenue well ahead of expectations on Thursday, snapping up new work as its two biggest rivals focus on merging their businesses.
Martin Sorrell's British firm said like-for-like growth for the three months to the end of September was up 5 percent, a clear acceleration from the 2.4 percent it reported in the first half and ahead of the 3.8 percent predicted by analysts.
The key rate of growth was also well ahead that reported by its two biggest rivals, Omnicom and Publicis, helped by the addition of $3.7 billion of net new business, putting it first in all net new business tables.
"Quite apart from a global economic outlook which is generally strengthening, WPP may also be reaping some rewards as it capitalises on the inevitable corporate delays which will be occupying its new rival Omnicom/Publicis," said Richard Hunter, head of equities at Hargreaves Lansdown.
"The shares have risen 60 percent over the last year, as compared to a 15 percent hike for the wider FTSE 100. Despite this punchy performance, WPP remains a market darling."
France's Publicis and U.S. firm Omnicom are hammering out a merger to leapfrog WPP and become the world's largest advertising company by revenue.
The deal, analysts say, gives WPP an opportunity to poach blue-chip clients as the new agency is likely to face potential conflicts of interest.
Among the major contract wins secured in recent months by WPP was General Electric and GSK, two big-spending advertisers which moved part of their work from agencies at either Omnicom or Publicis following reviews.
Publicis reported a slowdown in trading earlier this month when it posted organic revenue growth of 3.5 percent while Omnicom reported growth in that period of 4.1 percent.
WPP did not change its outlook but said provisional forecasts for the fourth quarter showed a rate of growth similar to the first nine months.
It recorded nine-month organic growth of 3.3 percent and had previously said it expected the full-year figure to be over 3 percent. Analysts said the group was taking a cautious stance by not raising its guidance, although many said they expected to lift theirs.
Shares in the group were up 2.3 percent at 0823 GMT, outperforming a 0.3 percent rise in the FTSE 100 index, giving WPP a market valuation of 18 billion pounds.
The group said the improved trading was due to an easier comparative last year in September and improvements in North America, Britain and Latin America. It reported growth from its British business at 8.1 percent while western continental Europe was relatively robust at 2.6 percent growth.
Organic growth in North America was 4.6 percent.
Sorrell told Reuters on Thursday it was still too early to tell what the full impact would be from the Omnicom and Publicis merger, and noted the two sides were having to work out their "clunky structure". He said he did expect to benefit from the deal in the long run though.
"Amusingly they announced they were going to have an integration committee but didn't say who was going to be on it," he said. "Quite funny really."