Philip Green launches fierce attack on M&S's institutional shareholders

Philip Green mounted an assault yesterday on the institutional shareholders he must win over to stand any chance of acquiring Marks & Spencer, accusing them of misleading him about the type of deal structure they wanted.

Philip Green mounted an assault yesterday on the institutional shareholders he must win over to stand any chance of acquiring Marks & Spencer, accusing them of misleading him about the type of deal structure they wanted.

His attack came as he predicted that it would take up to 10 years to restore M&S as the country's flagship retailer.

Separately, it emerged that the biggest investor in M&S had sold down part of its stake last week after the company's board rejected Mr Green's takeover proposal. Brandes Investment Partners, the US fund manager that could decide M&S's fate, sold more than £10m of stock on Friday in a move that raised question marks over its plans for its remaining 12.86 per cent stake. The San Diego-based group sold 500,000 American Depositary Receipts for $39.63 - some 2 per cent of its holding.

Traders said Brandes's sale could spook some investors that are holding stock in the hope that Mr Green will raise his bid. Traditional UK pension funds that take a long-term view, including Scottish Widows, Schroders and Barclays, have been raising their shareholders in M&S since Mr Green said he was planning to bid. Shares in M&S yesterday slipped 6.25p to 355.25p before recovering to close 0.5p higher at 362p.

Mr Green sounded out City institutions about whether they would prefer an all-cash or cash-and-shares bid before tabling an indicative proposal last Thursday that would have given shareholders 25 per cent of the bidding company on top of a 290p to 310p cash offer. M&S's board rejected the bid.

Yesterday Mr Green said the institutions had given him "a very clear indication they wanted some share in the upside" of M&S's fortunes should his takeover bid succeed. But investors have since criticised his offer of stub equity, insisting they do not want to be minority investors in a company controlled by Mr Green.

One top-ten investor said: "We don't particularly like being minority shareholders, particularly in a company when the majority shareholder doesn't want any institutional investors."

Mr Green, who was speaking at a business conference for entrepreneurs, said: "This is the reason why I don't know where I stand now. A week on, I am not really sure what these people [shareholders] want."

City institutions have been bruised by Mr Green's acquisitions of Sears, Bhs and Arcadia, deals that have helped to turn the Monaco-based entrepreneur into Britain's fourth-richest man on paper. Within one year of buying Arcadia - from Stuart Rose, who was installed as chief executive of M&S last week - Mr Green had managed to increase the Top Shop to Burton retailer's profits by 96 per cent.

Although Mr Green has said he intends to sound out the biggest shareholders in M&S to gauge their reaction to his proposal, yesterday he said he had yet to talk to any investors. When he or his advisers - Merrill Lynch and Goldman Sachs - do consult the institutions, they are expected to query Mr Rose's track record, highlighting that his recent success has been in selling retail businesses rather than running them.

"M&S is a wonderful brand. It has been poorly run. It has lost its way. I believe it's a business I can fix," Mr Green said. But he warned: "It will take five to 10 years of hard work to get this company back at the forefront of retailing."

Meanwhile, Mr Green's camp suffered an embarrassing blow after the Takeover Panel forced it to issue a statement denying a report that claimed he would abandon his plan to acquire M&S if the deal became the subject of a full competition inquiry. Revival Acquisitions, Mr Green's bid vehicle, said: "Contrary to recent press speculation, Revival has yet finally to determine whether, if it were to make an offer for Marks & Spencer Group and such offer were to be referred to the Competition Commission, it would still wish to pursue its interest in acquiring M&S or which, if any, undertakings it might be prepared to offer in order to secure clearance from the Office of Fair Trading or the Competition Commission."

Observers said the statement was aimed at ensuring Mr Green's options remained flexible. Should he drop his plans to bid, under Panel rules he would be barred from stalking M&S for 12 months.

Although any merger would fall under the OFT's microscope, competition lawyers do not believe that the watchdog would block a deal. Combining Mr Green's three clothing empires would give him control of about 20 per cent of the UK clothing market. It would have a 26 per cent share of the womenswear market and up to 40 per cent of the tightly defined middle market in ladies' wear.

Yesterday Mr Green said: "We do not believe there is a competition issue. We've done our homework." He declined to comment on Brandes's decision to sell down its stake, although he will need to persuade the US fund manager to back him if he returns with a higher offer.

Brandes has remained tight-lipped about its plans for its stake, although it does describe itself as a "value investor" that takes stakes in companies it believes trade at a discount to their intrinsic value. It started to build up a stake in M&S in December 1999 shortly after the retailer ran into difficulties. It sold its holding down during the group's recovery in 2002, banking a profit. It reverted to buying shares at the end of last year, becoming M&S's largest shareholder in March when it acquired an 11.1 per cent stake.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Financial Adviser

£20000 - £60000 per annum: Recruitment Genius: Are you recently QCA Level 4 qu...

SThree: Graduate Recruitment Resourcer

£20000 - £22500 per annum + OTE £30K: SThree: SThree Group have been well esta...

Guru Careers: Application Support Analyst / 1st Line Support

£25 - 30k: Guru Careers: We are seeking an Application Support Analyst / 1st L...

Guru Careers: .NET Developer / Web Developer

£45K - £55K (DOE) + Benefits: Guru Careers: We are seeking a full stack .NET D...

Day In a Page

Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

How a costume drama became a Sunday night staple
Miliband promises no stamp duty for first-time buyers as he pushes Tories on housing

Miliband promises no stamp duty for first-time buyers

Labour leader pushes Tories on housing
Aviation history is littered with grand failures - from the the Bristol Brabazon to Concorde - but what went wrong with the SuperJumbo?

Aviation history is littered with grand failures

But what went wrong with the SuperJumbo?
Fear of Putin, Islamists and immigration is giving rise to a new generation of Soviet-style 'iron curtains' right across Europe

Fortress Europe?

Fear of Putin, Islamists and immigration is giving rise to a new generation of 'iron curtains'
Never mind what you're wearing, it's what you're reclining on

Never mind what you're wearing

It's what you're reclining on that matters
General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

Chuka Umunna: A virus of racism runs through Ukip

The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
Yemen crisis: This exotic war will soon become Europe's problem

Yemen's exotic war will soon affect Europe

Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
Marginal Streets project aims to document voters in the run-up to the General Election

Marginal Streets project documents voters

Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

The real-life kingdom of Westeros

Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
How to survive a social-media mauling, by the tough women of Twitter

How to survive a Twitter mauling

Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

At dawn, the young remember the young

A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

Follow the money as never before

Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

Samuel West interview

The actor and director on austerity, unionisation, and not mentioning his famous parents
General Election 2015: Imagine if the leading political parties were fashion labels

Imagine if the leading political parties were fashion labels

Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence