M&S facing flak for failing to talk

Retail billionaire Green claims support of more than a quarter of shareholders for £9.1bn takeover bid
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Paul Myners, interim chairman of Marks & Spencer, will face a volatile annual meeting today as shareholders demand to know why the company has refused to talk with Philip Green over his proposed £9.1bn bid, even though the entrepreneur now claims 27 per cent of investors support him.

Paul Myners, interim chairman of Marks & Spencer, will face a volatile annual meeting today as shareholders demand to know why the company has refused to talk with Philip Green over his proposed £9.1bn bid, even though the entrepreneur now claims 27 per cent of investors support him.

Mr Green's Revival Acquisitions said yesterday investors holding either shares or derivatives accounting for 14.1 per cent of M&S's shares wanted the board to allow him to carry out due diligence. Two other shareholders speaking for 13 per cent - Brandes Investment Partners and Schroders - have said they would accept Mr Green's proposed 400p-a-share offer if the board recommended it.

M&S was given a boost ahead of today's annual meeting at the Royal Festival Hall in London when Standard Life yesterday fell in behind management and publicly backed the strategic plan put forward by Stuart Rose, the chief executive.

The Edinburgh-based institution, which owns just over 2 per cent of M&S and is one of its biggest shareholders, said Mr Green's proposal undervalued the retailer's prospects.

David Cumming, head of UK equities at Standard Life Investments, said: "Based on the plan outlined in July 12 and following further detailed discussions with the new management team, Standard Life has concluded that the proposed bid by Philip Green undervalues M&S's recovery prospects. Consequently we have decided to reject the proposed bid."

In another development, two credit rating agencies downgraded M&S's credit worthiness after M&S unveiled plans to hand back £2.3bn to shareholders on Monday. Standard & Poor's cut M&S three notches from A to BBB while Moody's cut M&S two from A3 to Baa2.

Private shareholders planning to attend today's event were as split as the institutions appear to be over the merits of Mr Green's plan and his prospects of persuading the board to grant due diligence.

Richard Seldon, a member of the UK Shareholders Association (UKSA), a lobby group for private investors' interests, said: "I think they will have to open up the books in due course. I should imagine it's going to be a fairly lively meeting."

Nick Steiner, another UKSA member, said: "If he [Mr Green] sees a buy at 400p-a-share then the current management ought to be able to keep M&S as it is and progress it.

"Why shouldn't a public company be able to do these things? Why should it be a private buyout that makes the money?"

M&S said that it had received 60 letters from private shareholders who hold 20 per cent of the retailer's shares, with 10 to one support for Mr Rose's plan for the company.

The meeting will vote on Mr Rose's £850,000 annual pay package and bonus arrangements as well as severance packages of former chairman Luc Vandevelde and ex-chief executive Roger Holmes.

The Association of British Insurers and the National Association of Pension Funds, the UK's leading shareholder groups, have not raised corporate governance issues relating to today's annual meeting, although both confirmed they would examine the corporate governance standards of the board put in place to run M&S if Mr Green wins his bid battle.

Analysts continued to publish published upgrades to M&S's expected earnings with Deutsche Bank increasing its earnings per share figure for 2006-07 from 30p-per-share to 41.5p. "Since Green is unable/unwilling to increase his offer or go hostile, unless investors are able to persuade management to open a dialogue with Green, the chances of a change in ownership of M&S are quickly receding," said Deutsche.

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