Green may quit M&S battle as City rejects 'stub' equity plan

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The Independent Online

Philip Green may drop his £8bn pursuit of Marks & Spencer after institutional investors rejected his plan for an equity "stub" as part of his conditional bid.

Philip Green may drop his £8bn pursuit of Marks & Spencer after institutional investors rejected his plan for an equity "stub" as part of his conditional bid.

The Monaco-based owner of Bhs and Arcadia is this weekend considering his position and is expected to make a further statement this week. He is expected either to make an all-cash offer, valuing M&S at £9bn, or walk away.

Four years ago, he abandoned his bid approach for M&S after it appointed Luc Vandevelde as chairman. This time, the appointment, announced on Monday, of Stuart Rose as chief executive has strengthened M&S' defence.

On Thursday, Mr Green made an indicative offer that had a cash element of between 290p and 310p plus a 25 per cent equity interest in the business then owning M&S. This has been valued at as little as 23p a share, though Mr Green's camp say it could be worth around 90p.

M&S shares closed on Friday at 357.5p, valuing the retail group at £8.1bn.

Institutional investors indicated they were not keen on the stub equity and Mr Green is now reconsidering the structure of the bid. He has £9bn of committed funds from banks and has the ability to make an all-cash offer of 400p a share for M&S.

Mr Green is understood to be concerned that such a bid would put too much financial strain on the company that ended up owning M&S.

Mr Rose said he expected Mr Green to come back with an increased offer. "He is a determined man," said the M&S chief executive.

M&S is expected to unveil a £1bn increase in the value of its property as a key plank of its defence. The revaluation could pave the way for a £3.5bn sale of the property, with cash being returned to shareholders.

Mr Rose last week ordered surveying firm DTZ to carry out a full revaluation of M&S's property portfolio.

DTZ refused to comment. However, a well-placed source said that a property sale could be on the agenda and that the cash raised could be returned to shareholders.

"We will be looking at all the assets in the business, but there is no real rush to do anything," Mr Rose said.

M&S owns property in more than 300 sites across the UK, in what is regarded as some of the most prime locations. However, the company hasn't conducted a full, external revaluation of its estate since 1988, according to an M&S spokeswoman.

M&S's estate has a book value of £2.15bn and analysts now believe that it could be worth between £3bn and £3.5bn.

The bidder bit: when the retail raider lost his cool with Snow on TV

John Snow, Channel 4 News: Surely you have to make a firm bid?

Philip Green: Whoa, hold on a second. As far as I'm concerned on the basis I have five international banks that have confirmed committed finance and committed means its on call this afternoon OK? As far as I'm concerned I've evidenced my money, OK.

JS: So you have made a bid?

PG: I've evidenced I have financial capability so I'm a bona fide purchaser. That's what evidencing your money means. There are three questions I've asked that could have a massive variation to value.

JS: But until yesterday you retained Freshfields who know the answers to those questions?

PG: I don't know if they do or they don't know about them. They don't know about the pension fund.

JS: It's hard to believe that you've been working on a bid with Freshfields...

PG: Could you stop your camera? I think we should stop. (Interview is terminated.)

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