'Only days left' warns Green after M&S unveils bid defence

Shareholders urged to confront management at annual meeting * Jury out on Rose's new strategy
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The Independent Online

Philip Green last night urged shareholders in Marks & Spencer to use tomorrow's annual meeting to demand that the retailer's board begin talks over his proposed £9.1bn offer.

Philip Green last night urged shareholders in Marks & Spencer to use tomorrow's annual meeting to demand that the retailer's board begin talks over his proposed £9.1bn offer.

"Time is running quite short," Mr Green said in a conference call with shareholders at 6pm last night. "We are talking not many days."

Mr Green unveiled further funding details last night, confirming that his bid had the backing of £1.6bn of his and his family's own money plus £1.4bn from HBOS, Goldman Sachs and Barclays Capital. These banks, along with Merrill Lynch and Royal Bank of Scotland, will provide debt of £8.1bn for his bid.

Mr Green was addressing shareholders after M&S had announced a £2.3bn share buy-back, plans for annual cost savings of up to £320m and the sale of its financial services division for £762m to HSBC.

The measures, which hold out the prospect of M&S profits rising toward £1bn a year, were part of a package of initiatives to try to fend off Mr Green's takeover proposal and persuade shareholders to give Stuart Rose, the new chief executive, time to deliver more value for shareholders.

Mr Rose said: "Marks & Spencer is a great business with a strong brand. Today's announcement sees us refocusing on our core retail activities with an emphasis on delivering great product for our 25 million customers. The board is confident that these measures, together with unlocking the retail potential of Marks & Spencer, will deliver value significantly in excess of 400p-per-share to our shareholders."

However, the plan, which also includes the £125m acquisition of Per Una from George Davies and a revamp of M&S stores and product ranges, was immediately attacked by Mr Green. He said the strategy was largely based on delivering £250m of cost savings in 2005-6, rising to £320m in 2006-7. He said these could not be guaranteed by the company.

Shareholders remained split, with many institutions waiting until they had met M&S in private before making up their minds whether to back Mr Rose or demand that the M&S board start talks straight away with Mr Green's Revival Acquisitions.

Richard Buxton, of Schroders Investment Management, said shareholders should be given the chance of choosing between Mr Rose's plan and Mr Green's offer. Robert Waugh, the head of UK equities at Scottish Widows Investment Management, said: "We have noted the company's announcement today and we welcome the action taken by the company and by the board to realise value for shareholders. We can see the value that the stated policies would deliver. We are meeting Stuart Rose next week to determine the attainability of his proposals. We will decide what action to take after that meeting."

One top-five shareholder said: "If you take an optimistic interpretation of the announcement from M&S today, they have done enough to survive independently of Mr Green. But we want to go through the numbers again and we will be seeing the company later in the week."

M&S said it would be handing back £2.3bn to shareholders in the form of a tender offer and that it would continue to partner with HSBC and benefit from the profits of its M&S Money division, as it would now be run as a joint venture.

Mr Rose said M&S had become too complicated and its stores too cluttered. A marketing and advertising campaign with the slogan "Your M&S" will be launched to try to entice customers back.

ROSE'S BATTLE PLAN

Share buy-back returns £2.3bn, or £1 a share, to shareholders;

M&S Money sold to HSBC for £762m, with M&S agreeing to a profit share;

Per Una business acquired from George Davies for £125m;

Buying improvements and cost savings worth £250m in 2005-06 rising to £320m in 2006-07;

Retail performance to be improved, with new focus on core customer;

Property portfolio revalued at £3.6bn.

Store closure: The Lifestore homewares outlet in Gateshead, Tyne and Wear, is to be axed.

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