Marks & Spencer rejects £8.4bn Green bid

Billionaire retailer offers 370p cash or paper * Board says offer still 'significantly undervalues' group
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The Independent Online

Marks & Spencer last night insisted it was "not for sale"' as it rejected a revised £8.4bn takeover proposal from Philip Green, which it says "significantly undervalued" the group.

The company revealed it had received a fresh 370p a share cash proposal "in relation to a possible offer" from Mr Green yesterday afternoon. Any offer would include a "partial equity alternative", it added.

Paul Myners, the M&S chairman, said the proposal, which came less than two weeks after Mr Green made his initial indicative offer, did not "fully reflect the value of the business or its prospects".

He added: "We have to commit to doing what we judge to be in the very best interests of our shareholders. But an offer of 370p simply is not at a level that we could recommend for representing good value... the business is not for sale."

The board's swift dismissal puts Mr Green back on the back foot. He would not disclose whether he was prepared to launch a hostile bid. Today his camp is likely to put pressure on M&S shareholders to lobby the retailer's board to reconsider Mr Green's approach.

Mr Green's camp has spent the past week sounding out M&S's biggest shareholders, including its three key US investors, about what level he would have to pitch his offer for them to take him seriously. However, several institutional investors, including Isis Asset Management, have said that they would not be prepared to consider any bid worth less than 400p a share. Analysts have valued M&S, the UK's biggest trophy retailer, as up to 450p per share.

M&S shares, which were trading at about 270p three weeks ago, had soared 13.5p to 370.5p earlier in the day on speculation that the Bhs owner was preparing a fresh bid before falling back to close up 6.5p at 363.5p.

Under the terms of the proposal Mr Green's personal equity injection would have soared by £500m to £1.1bn, while his financial backers HBOS, Goldman Sachs and Barclays would have lifted the amount of equity they are committing to the bid to £1.9bn collectively. He said he had raised committed financing of £10.4bn. Mr Green said any offer would hinge on limited due diligence. He repeated his request for further information about four key areas of M&S business, including the state of the retailer's pension fund and the details of its contracts with the per una designer, George Davies. "He wanted greater granularity ... on a number of areas," Mr Myners said.

Goldman Sachs, Mr Green's financial adviser, contacted M&S at midday yesterday with details of the proposal from Revival Acquisitions, the entrepreneur's bid vehicle. At about 4pm Mr Green met Mr Myners and Stuart Rose, the M&S chief executive, in Grosvenor Square. The M&S board convened shortly after to discuss the approach, which they took less than two hours to dismiss.

Asked how Mr Green reacted to the rejection, Mr Rose said: "Philip was very professional, as you would expect him to be. We had a telephone conversation and he listened."

M&S reiterated that Mr Rose and his team remained set to unveil their blueprint for restoring the company's fortunes next month, two days before its annual meeting. "I am confident that when we talk to you on 12 July we will be able to outline operational improvements which we think will demonstrate the value in the business," Mr Rose added.

He admitted the group had not sounded out its shareholders' views before rejecting the proposal, but said its advisors were in constant contact with them.