The colourful entrepreneur behind high-street success stories such as Top Shop and Burton is considering a possible take-over of the beleaguered Marks & Spencer chain.
Philip Green, whose group also owns Arcadia and BhS, threatened to bid for M&S in December 1999 but never went ahead with an official offer. Yesterday, however, he confirmed that he intended to approach the M&S board in the next few days with a proposal and would try to seek a recommendation from the board for his offer.
Shares in Marks & Spencer, which dropped as low as 280p earlier in the week after a lacklustre second half-year profits statement, closed for the day nearly 19 per cent higher at 345p. The shares had moved up earlier in the day after rumours swirled around the market that Mr Green was about to pounce.
Analysts said that Mr Green would have to offer at least 350p a share - valuing M&S at nearly £11bn - to stand a chance of being successful this time around in bidding for one of Europe's best-known high-street names.
Mr Green's intention to make a bid comes at an awkward time for M&S. The group is looking for a chairman to replace Luc Vandevelde, who was deemed to be spending too much time on other projects, and earlier this week Roger Holmes, the chief executive, admitted that the board was "under pressure to perform" after it announced its disappointing financial results.
M&S's so-called recovery has shown signs of faltering in recent months, with all areas of its business under pressure. Its clothing sales are under pressure from competitors such as Next at the mid-range or supermarkets such as Asda and Tesco at the cheaper end of the market. Its recently opened Homestore furniture business has got off to a slow start and even its food stores are said to be struggling.
Mr Green once swore that he would not return to the stock market after an unfortunate experience with a company called Amber Day - from which he was ousted after a profits warning. For the purpose of this bid, he is setting up a company called Revival which he intends to list on the stock market. Marks & Spencer shareholders would therefore be able to accept shares in the new company if a bid went ahead as planned.
Some City experts, however, were sceptical that a bid would materialise. The last time Mr Green said he was considering a takeover of M&S, the M&S board leaked details of some share-buying by the retail entrepreneur's wife ahead of an announcement of his intentions. Mr Green shortly afterwards backed off from bidding for the group. Mr Green is known for his colourful language, his sharp wit and his utter ruthlessness in business. He has his detractors in the City, who argue that he is good at making money for himself and a few favoured acquaintances at the expense of shareholders who have sold out to him on the cheap.
However, his success at paying down debt at breakneck speed after his acquisitions of BhS and then Arcadia have earned him a loyal following from institutions such as Merrill Lynch and HBOS, the former Halifax and Bank of Scotland group headed by James Crosby.
In previous deals, Mr Green has found also financial backing from Robin Saunders, a glamorous banker who used to head up the principal finance department at the German bank West Deutsche Landesbank. Ms Saunders, however, left West Deutsche after a couple of investments went wrong and she is not believed to be among Mr Green's current group of financiers.
- More about: