New approach from Philip Green triggers emergency meetings at Marks & Spencer

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The Independent Online

Advisers to Marks & Spencer, the struggling retailer, were last night locked in meetings after receiving notice that Philip Green, the retail entrepreneur, intended to make an offer for the group.

Advisers to Marks & Spencer, the struggling retailer, were last night locked in meetings after receiving notice that Philip Green, the retail entrepreneur, intended to make an offer for the group.

Chairmanless M&S issued a statement after the market closed saying simply that it had noted the announcement made by Revival Acquisitions, a company owned by Mr Green and members of his family, but that it had received no proposal at this point.

The rattled retailer, which fought off threats of a bid from Mr Green in December 1999, also said: "A further announcement will be made as and when appropriate."

The M&S statement came at the end of a hectic afternoon's trading in the group's shares, which closed the day up nearly 19 per cent at 345p, their highest level for more than a year.

Mr Green's statement to the stock exchange led to a swift board meeting being called at the M&S headquarters in Baker Street which was attended by non-executive directors including the chief executive of Misys, Kevin Lomax, and the former head of MI5, Stella Rimington. Luc Vandevelde, the outgoing chairman, was not physically at the meeting but was said to have been "fully involved" in the discussions.

An M&S spokesman said after the meeting that "if and when we receive a proposal we will evaluate it very carefully, bearing in mind our shareholders' interests".

Mr Green, whose empire takes in Bhs department stores and Arcadia ­ the owner of the Topshop and Dorothy Perkins fashion chains ­ is the first potential bidder for Marks & Spencer to show his hand. He said he would approach the M&S board in the next few days.

"Any proposal would involve a mixture of cash and shares in a new company which would seek a listing," said the statement from Revival Acquisitions.

Analysts said that Mr Green's move could spark a bidding war for M&S, whose downbeat statement earlier this week left it vulnerable to takeover bids ­ especially since it is effectively without a chairman now that Mr Vandevelde plans to leave the group to pursue other business projects.

"Mr Green's timing is impeccable," said Richard Ratner, an analyst at Seymour Pierce. "M&S is rudderless and the current chairman has minus credibility.The clothing business is in a mess, both in terms of margins and style, and Mr Green is the best merchandiser and sourcer in the country."

Analysts reckonMr Green will need to bid up to £10bn ­ or 400p a share ­ to be successful in acquiring M&S, given its strong brand and asset base.

There was speculation last night that Mr Green's offer may tempt others to make a bid. Mr Ratner said that KKR, the private equity group, could be interested, but others said it would be difficult for such a group to be able to match the synergies that Mr Green could benefit from if his takeover went ahead.

Mr Green's move followed a statement from M&S earlier this week when its chief executive, Roger Holmes, admitted that his team was "clearly under pressure to perform". "We still have a lot to do," he added.

Mr Ratner said that the M&S boss had simply been trying to be open and honest in his assessment of the group's situation but that his honesty had inadvertently opened the door to an unwanted takeover offer.

M&S said it had attempted to be realistic about its situation and rejected suggestions that its management had not been positive enough.

Mr Green's move was last night said to have made it almost impossible for Stuart Rose, the former chief executive of Arcadia, to be considered for the chairman's role at M&S.

One source close to the situation said the company had not heard about the approach until yesterday.

"(Mr Green) knows the shareholders are disgruntled; he knows management's credibility is in doubt. So he's obviously going to go in there and try and squeeze them out," another banking source said, naming Stuart Rose as a possible contender to lead a new management team.

Goldman Sachs and Merrill Lynch are advising Mr Green, whose financial backing is believed to come from HBOS and Royal Bank of Scotland. Morgan Stanley traditionally advises M&S.

In recent years the company has axed thousands of jobs and unravelled its network
of overseas stores to focus on Britain.

"The main thing that Marks & Spencer needs is management," said Andrew Hobson, a fund manager at Exeter Asset Management. "The brand retains a lot of value and a lot of customer loyalty; a lot of people traipse in and out of the stores but 25- to 55-year-old women seem to have deserted them in droves."

Recent attempts to restyle M&S's clothing offering have brought criticism from some quarters, with critics arguing that the new ranges are aimed at too young and trendy a customer base.

Meanwhile the group's high-profile attempts to establish a home furnishings line, Homestore, have been considered by some as too adventurous.

The figures produced earlier this week revealed that sales at stores that have been open for at least a year fell 0.4 per cent over the year.

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