M&S to net £100m a year in new supply deals

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Marks & Spencer has forced through higher margins on its food and clothing suppliers that will deliver savings of £100m a year to the retail giant.

Marks & Spencer has forced through higher margins on its food and clothing suppliers that will deliver savings of £100m a year to the retail giant.

The company, under pressure from Philip Green, the Bhs billionaire who is trying to buy the company, will announce the new agreements today.

It has agreed improved discounts from suppliers of 7.5 per cent this year, which will rise to 10 per cent next year. The savings, first revealed by The Independent on Saturday, will be couched by M&S as the first evidence of the improvements that M&S shareholders can expect to see under Stuart Rose, the new chief executive, who is due to give a full strategic update on 12 July.

However, the news of the savings could backfire and play into the hands of Mr Green and his bidding team. It is understood that many suppliers are unhappy with the changes that they feel are being imposed by M&S. Some want to wait to see who ultimately triumphs in the £8.4bn bidding war for M&S before they sit down to negotiate new price agreements with the retailer.

Although M&S insists its call for lower prices is not an ultimatum, it is understood that the letters informing suppliers of the price changes were marked "non-negotiable". One person close to Mr Green said: "You can't just haircut the suppliers. It just doesn't work like that."

However, M&S believes that these new agreements will be better for suppliers than life under a Mr Green-owned M&S. In a statement, M&S said: "Following meetings held with key general merchandise and food suppliers, management expects to achieve annual buying improvements of at least £100m during the year ending March 2006 and thereafter." In a separate twist to the M&S saga, Mr Rose has issued a series of notices under the Data Protection Act. The move is the latest development in the row Mr Rose is having with Goldman Sachs.

The notices require the recipients to disclose all personal information they hold on Mr Rose. It is expected that the notices will have been sent to than banks and advisers involved in Mr Green's bid for M&S.

M&S's new supply agreements are unlikely to deter Mr Green's efforts to buy M&S. He is continuing to woo the American shareholders of M&S as he presses ahead with plans to bid for the retail giant.

The Bhs entrepreneur was forced to clarify his position to the stock market after talks between the Takeover Panel and his City advisers. Newspaper reports had suggested he had told his bidding team that he would walk away from the bid at the end of July unless shareholders pressured the M&S board to talk to Mr Green. This created the impression that Mr Green had decided to set a deadline for his proposal to buy M&S. Revival Acquisitions, Mr Green's bid vehicle, said in a statement: "Contrary to the article... We wishto clarify that no such decision has been taken."

Meanwhile, the search to identify the person who gained access to Mr Rose's mobile phone records has intensified, with suspicion falling on media organisations as the most likely culprits.