Green seeks feedback on share element in revised M&S bid

Click to follow
The Independent Online

Philip Green is planning to sound out shareholders in Marks & Spencer about whether they are keen for him to include an equity alternative in any revised bid for the retailer.

Philip Green is planning to sound out shareholders in Marks & Spencer about whether they are keen for him to include an equity alternative in any revised bid for the retailer.

The Monaco-based entrepreneur yesterday met with his advisers to mull over his options. They include tabling a revised all-cash offer, which could value M&S at up to £10bn including debt, and raising the amount of stub equity that he offers investors.

Shares in M&S yesterday rose 4p to 361.5p, valuing the group's equity at £8.2bn, as the City bet that Mr Green would raise his offer. The retailer's board last week rejected Mr Green's first proposed offer, which included giving investors a 25 per cent stake in a new M&S holding company.

Shareholders yesterday appeared split over the merits of a higher straight cash offer versus a mixture of cash and shares in a newly created company controlled by Mr Green. Tim Green, at Brewin Dolphin, one of M&S's top UK institutional investors, said: "I don't see an all-cash offer being particularly useful because people want a share in the upside. The offer of equity was a great idea and shouldn't be dropped too hastily."

However another top 10 shareholder questioned the point of an equity alternative given the City's inability to decide what the so-called stub was worth. Analysts valued the equity portion of Mr Green's proposal last week at anything from 22p to 100p per share. "The market is very poor at valuing these vehicles. My preference is for a cash premium," the shareholder said.

Analysts reckon that Mr Green would have to offer more than 400p per share in cash to win the support of the group's institutional investors. But even this may not be enough to sway the 350,000-strong army of private investors who own around 20 per cent of the company.

The three US institutions - Brandes, Artisan Partners and Capital International - that own almost one-fifth of M&S remained tight-lipped about their plans for their stakes. The trio share a reputation as long-term value investors.

Separately, Mr Green's camp denied reports it sought informal guidance from the Office of Fair Trading over any competition issues that may arise from a bid. The Bhs and Arcadia owner would control more than 25 per cent of the womenswear market if he acquires M&S.

Comments