Arcadia bid 'could top 400p a share'

TOP Shop owner Arcadia is being courted again - this time by retail tycoon Philip Green. The Bhs boss has made a tentative 365p-a-share offer for its clothing rival, valuing it at £691m.

The approach, made privately to Arcadia last Tuesday, was swiftly rebuffed by chief executive Stuart Rose. Few expect the courtship to end there, though Green may have to offer more than 400p to get the board's backing.

'I am fully financed at 365p and ready to go, subject to getting a recommendation from the board,' said Green. 'The price is fair. Arcadia has been through a good year, but there is no guarantee it is sustainable in the long term.'

Arcadia shares, which closed at 300 1/2p on Friday, are likely to get a welcome boost today. Green's offer is a 21% premium to Friday's share price, but below this year's 417p peak.

Retailers have been battered on fears that the High Street boom is coming to an end. Arcadia, which also owns fashion brands Dorothy Perkins, Burton and Miss Selfridge, is seen as vulnerable to a slowdown. But Green, known as a shrewd operator, clearly believes the retailer is worth more than the share price.

Rose confirmed that Green's family firm Taveta Investments Ltd has made an approach. 'The board unanimously concluded that it undervalued the company and did not form an acceptable basis for further discussions,' he said.

The big question is whether institutional shareholders can hold on for a recovery or want to make a quick buck now.

Green said he already had support from Baugur, the Icelandic retailer that owns 20% of Arcadia. Baugur launched a failed bid for Arcadia earlier this year and 'would like to buy a couple of the young fashion brands'. It seems Green has agreed to sell Top Shop and Miss Selfridge to Baugur if it backs his offer.