Marks & Spencer Investors Reject Latest Pounds 8.4bn Offer ; BUSINESS ANALYSIS Big Shareholders Back Board's Swift Decision over Approach from Billionaire Retailer

By Mesure, Susie | The Independent (London, England), June 18, 2004 | Go to article overview
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Marks & Spencer Investors Reject Latest Pounds 8.4bn Offer ; BUSINESS ANALYSIS Big Shareholders Back Board's Swift Decision over Approach from Billionaire Retailer


Mesure, Susie, The Independent (London, England)


INSTITUTIONAL INVESTORS in Marks & Spencer yesterday gave short shrift to Philip Green's revised 370p-a-share takeover proposal, dismissing the Bhs owner's latest move as summarily as the retailer's own board.

Shares in M&S slid 6.75p to 356.75p, reflecting scepticism that Mr Green would mount a fresh attack. Mr Green was considering his options last night and waiting for feedback about what M&S's top shareholders thought of his approach.

"I've put my best foot forward and we'll see what the shareholders have to say before deciding what to do," he said. He maintained that shareholders were "clearly selling" stock yesterday because they lacked faith in Stuart Rose, the group's new chief executive.

One of M&S's top 10 investors said: "We back the board's rejection of an offer at this level." M&S said 370p a share, which compared with the original offer, worth the equivalent of 332p a share, still "significantly undervalued" the company and its prospects. The degree to which it does will hinge on whether Mr Rose manages to convince shareholders that he holds the key to unlocking the group's potential when he updates them on his plans for the business on 12 July.

Tim Green, a fund manager at Brewin Dolphin, said he was "mystified" by Mr Green's fresh "smokes-and-mirrors" proposal. "He gives you 60p with one hand and takes away a quarter of the company with another," he added, referring to Mr Green's apparent decision to drop plans for making a compulsory equity "stub" part of his bid.

Stuart Fowler, at Axa, said Mr Green would have to offer between 425p and 450p a share before investors would take him seriously. "Clearly the company is focused on delivering full value, so the only reason to sell it would be because someone is paying a premium to full value," Mr Fowler added.

However there was no still no word from M&S's US investors. If Mr Green manages to get Brandes, Artisan and Capital onside, then his chances of bagging the UK's biggest trophy retail asset would soar. Mr Green's camp maintained that he had sounded out shareholders before making his offer, suggesting someone, somewhere would be happy with what was a 37 per cent premium to where M&S's shares were trading before news of Mr Green's intentions leaked out.

Although several shareholders may have declared themselves unimpressed, Sundeep Bahanda, at Deutsche Bank, said the offer was "a decent one".

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