M&S calls in Rose to defend hostile bid

Chairman and chief executive ousted. Non-executives lost confidence in Roger Holmes two weeks ago
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The Independent Online

Stuart Rose, the feted retailer who sold Arcadia to Philip Green in 2002, was last night parachuted in as chief executive of Marks & Spencer, to defend the high street giant from a takeover bid expected from Mr Green this week.

Stuart Rose, the feted retailer who sold Arcadia to Philip Green in 2002, was last night parachuted in as chief executive of Marks & Spencer, to defend the high street giant from a takeover bid expected from Mr Green this week.

In a dramatic boardroom clear out, M&S appointed Paul Myners as interim chairman to replace Luc Vandevelde, and revealed the non-executives decided two weeks ago to sack Roger Holmes as chief executive.

The departure of Mr Holmes, with a pay-off of about £450,000, comes after increasingly shrill criticism from shareholders over M&S's stalled recovery.

Mr Rose said he "didn't take the job to sell the business" and said his first priority was to improve the trading performance.

"I am thrilled to bits. I have a great love for this business. It has a great history and a great reputation, and with the new blood that will be coming in with me I am sure that we can regain the high ground that it used to dominate for so many years."

Mr Rose made no secret of his desire to take the helm at M&S, where he spent 17 years of his early career. For weeks he has waged a semi-public campaign to get the board to consider him. Shareholders took up the baton on his behalf after Mr Green's bid intentions became known.

The final details of his pay and bonuses were still being hammered out last night, but his package is likely to include substantial share-based incentives.

Mr Holmes was informed yesterday that the non-executives had lost confidence in his leadership, but he had not previously known that they had begun the search to replace him. Just last week, at M&S's final results, he attempted to mount a spirited defence of his position, promising a radical overhaul of the business. A former management consultant, Mr Holmes has long been criticised for lacking retail flair - a criticism which has also been directed at the wider board. Recent declining sales in the core womenswear business sealed his fate.

Mr Myners, who is also the chairman of Aspen Insurance and Guardian Media Group, was the senior non-executive director at M&S and will receive no additional pay as its interim chairman. He described Mr Rose's appointment as "a very significant day for M&S" and praised his record in retailing.

"The board is very pleased to have appointed someone of Stuart's experience and retail prowess to lead the company into the next phase of its strategic development. The board is grateful to Luc and Roger for putting in place many of the building blocks for the sustained recovery and growth of the business," he said.

Mr Vandevelde, who had already agreed to resign when a successor was found, has left the company immediately with a pay-off of around £450,000. He said: "I wish I could have stayed to see Marks & Spencer through the present circumstances, but I can leave with the comfort that the company is in the best hands."

M&S was forced to speed up management changes as Mr Green's advisers worked through the weekend to put the finishing touches to a £10bn bid for the company, which the Bhs and Arcadia owner is aiming to present to M&S tomorrow. The approach is not likely to be in the form of a formal offer, but will instead be an outline proposal detailing how much cash is on offer and how large the equity portion which will give M&S shareholders an opportunity to participate in any valuation upside he is able to create.

The entrepreneur is putting £1bn of his own money into the bid, and has appointed Lord Stevenson of Coddenham to the board of his bid vehicle, Revival, to begin a search for suitable non-executive talent.

M&S has also assembled a new team of advisers to help defend any approach. The investment bank Citigroup has been hired to replace NM Rothschild, and will join Morgan Stanley and Cazenove in examining defence strategies. M&S has also brought in Tulchan as its lead public relations advisers, replacing Brunswick.

The advisers are already believed to be examining the feasibility of a big sale and leaseback deal on some of its £2.1bn property portfolio, releasing cash for a share buyback or special payout for shareholders.

The appointment of Mr Rose robs Mr Green of some of the advantage he had from his timing of an approach, when the chairmanship had been vacant and question marks were hanging over Mr Holmes.

Investors are now faced with a choice of credible management teams. M&S has been planning to question Mr Green's skills as a long-term creator of value in the retail sector, portraying him rather as a short-termist able to sweat assets but at the possible expense of the brand. Sceptics will also question Mr Rose's credentials in this aspect, since his fame lies in selling companies rather than in running them for the long term.