A bit too quick off the Marks

MARKS & Spencer is quickly learning that Philip Green is not going to go away. His latest offer, worth at least 370p cash with an equity alternative, was dismissed by chairman Paul Myners and the M&S board. It seems to be their view that M&S is not for sale at any price.

But Green's two offers have done Marks shareholders a huge service. Before Green made his first bid, M&S shares stood at 282p. After frenetic trading during the day, in which more than 40m shares changed hands, they closed at 363 1/2p last night. So if the M&S board had chosen to accept the Green offer, shareholders would be almost £1 a share richer.

The achievement of Green is not just that he has been able to put together a bid worth £8.4bn at the very least.

He has provoked a huge shake-up that has seen the Luc Vandevelde regime of Roger Holmes and Vittorio Radice dismantled. A strategy announcement is being planned for next month with many of the innovations of recent times likely to be curtailed.

But it will need far more than tinkering if M&S investors, who include 330,000 small shareholders, are going to be satisfied that their board has not missed a golden opportunity. By refusing Green's friendly approaches, Myners and Rose are inviting a more costly hostile battle.

Green believes that his offer is actually worth considerably more than the headline figure - if the debt is added back to the price, along with employee share options and pension fund liabilities.

But M&S will not let Green, who has posed 14 sensible questions, look at the books. What we do know is that Green has financing to support a package worth £12bn if all the liabilities are included.

Instead of stating flatly that the company is being undervalued by Green, the board needs to consider the views of shareholders more carefully.

It is hard to imagine that big holders like Brandes would not be rubbing their hands at the idea of cashing out - or enjoying some of the uplift that a Revival equity stake might offer.

As for smaller investors, the M&S board - which has made so free with their money in recent times - cannot count on their wholehearted support much longer. They have been betrayed too many times.

King in the house

THE Mansion House speeches traditionally were the great monetary event of the year. That changed when the Bank of England turned independent in 1997.

But last night Mervyn King was determined not to lose the opportunity to remind Gordon Brown, sitting next to him, of his responsibilities.

The governor noted that it was the Chancellor's duty to make the budget balance and that recently the public finances 'have tilted more to the spending side'.

King said he had been assured that revenues would make up the shortfalls over the next three years, but did not seem entirely convinced.

Brown, for his part, remains determined to meet his own fiscal rules. He will announce spending cuts when he unveils his review this month.

Where Brown and King were in agreement was on interest rates. Both pointed out that the 'world interest rate cycle' has turned. But there was a difference of emphasis.

King is concerned that a combination of public spending, the surge in the housing market and manufacturing recovery has left little spare capacity in the economy and that there is a danger of overheating.

He notes that 'cost pressures are increasing and pay growth has picked up' (average earnings were up 4.3% in May). The governor leaves little doubt that interest rates, raised to 4.5% last week, will have to keep on rising if the Bank is to meet the inflation target of 2%. Brown vowed to be ' vigilant' (the new 'prudence', perhaps) by watching over oil prices, house prices and the budget.

Wearing his International Monetary Fund hat, Brown is promising to keep the pressure on oil producers to increase output. But with attacks on oil facilities in Iraq and the current security scare in Saudi Arabia, persuasion might be less effective than in the past.

Locking in stability might be the goal. But global events have a horrible habit of disrupting the cycle.

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HATS off to Roger Urwin and his cohorts at National Grid for taking a 10% pay cut as punishment for last winter's power blackouts.

But before anyone sheds a tear it is worth noting that Urwin will now be down to his last £1m in pay and his colleagues will receive around £600,000 a-piece.

Still plenty of cash there to helicopter in from Ascot to the Mansion House.