Green to balk at M&S price-tag

BILLIONAIRE entrepreneur Philip Green is telling allies that he has ruled out a £9bn bid for Marks & Spencer. The price - equivalent to 400p a share - is the minimum that many major investors say they would consider.

Green suggested ten days ago that he might launch a bid giving shareholders between 290p and 310p in cash and a 25% stake in the future business.

But the offer was greeted with derision by the City. And M&S appeared to outmanoeuvre Green with a series of boardroom and management changes, including the appointment of Stuart Rose as chief executive and Paul Myners as temporary chairman.

Green, who a week ago had an explosive confrontation with Rose on the pavement outside M&S's Baker Street headquarters in central London, had been expected to counter with a firm bid on substantially improved terms as early as this week. UK shareholders have indicated they would take an offer seriously only if it were pitched at 430p a share or above.

But Green has told friends that an offer of 400p or more is 'in their dreams'. He is still undecided about whether to press ahead with an offer for Britain's top High Street retailer.

This weekend, Green, who owns store groups Bhs and Arcadia, is taking time off at his home in Monaco. His advisers predict that if he walks away from M&S, the company's share price - now 366p against 280p before he signalled his interest two and a half weeks ago - would fall dramatically.

The moves mark the latest round of jousting between Green and M&S. Green is trying to dampen down expectations of a high bid to stop the share price rising any higher.

M&S, meanwhile, is promoting the idea of an improved offer in the hope that shares remain buoyant.

Rose wields axe as M&S drives down costs

MARKS & Spencer is gearing up for a further round of job cuts and a revaluation of its property portfolio to bolster its finances - whether or not maverick entrepreneur Philip Green makes a bid, wirtes Ben Laurance.

The old management, led until two weeks ago by chief executive Roger Holmes, had already said that about 1,000 head office jobs would go.

Stuart Rose - brought in to replace Holmes - and long-standing ally Charles Wilson are drawing up plans for further staff cuts. Wilson has led a search for potential cost-savings at M&S's head office in Baker Street, central London. And, though Rose and Wilson have been in place for less than two weeks, there has already been a clampdown on spending, say insiders.

M&S advisers are trying to pressure Green by raising expectations that he will return with a revised bid this week. This follows an unenthusiastic reception to his offer outlined ten days ago - around 300p cash for each M&S share plus 'stub equity', equivalent to a quarter stake in a new company set up to own the retailer.

Analysts predict that if Green increases his bid, it will either be a straightforward cash offer, or he will give M&S investors the chance to take cash as an alternative to the stub equity.

M&S is also embarking on a new valuation for its huge property estate, valued by the company at £2.1bn. But the last valuation was 16 years ago. Properties acquired since are in the accounts at their cost prices.

The changes at the top of M&S - with Luc Vandevelde quitting as chairman and Holmes replaced by Rose - have gone down well with investors.

Vittorio Radice, brought in by Holmes little more than a year ago, has been been pushed out. Radice's pet project, M&S's Lifestore at Gateshead, cost £170 a square foot, three times more than the amount spent on a typical clothing outlet. And Rose has moved Maurice Helfgott from the foods division back to work on clothing - he previously had a successful two years in charge of menswear.

M&S marketing director Alice Avis may quit after Rose appointed Steve Sharp, a long-standing ally. Sharp's remit includes marketing and store design.

'The management changes were absolutely on the button,' said an analyst who follows the company closely.

New projects launched during the chairmanship of Vandevelde are under intense scrutiny.

The Gateshead Lifestore has missed sales targets. But M&S is well advanced with opening a second store in Kingston, Surrey, and is likely to see whether that fares better than Gateshead before making any decision on whether to ditch the Lifestore idea.

The company's Simply Food outlets have performed patchily. The closure of one, in Barnet, north London, was announced in early March. There are likely to be further closures where they are either doing badly or winning sales at the expense of food departments in larger M&S stores.

An adviser to M&S said: 'We have been working at breakneck speed. It is only two weeks since Green said he would bid and we already have a new management in place. If he wants to give us more time, then that's just fine by us.'

Green's advisers say he has no need to rush. Meanwhile, M&S is still trying to identity investors who have been recent buyers of its shares.

The company is thought to have targeted billionaire bankers the Reuben brothers to establish if they have any holding in M&S.

David and Simon Reuben are friends of Philip Green. But members of the Green camp have consistently denied that the brothers, who made their fortune in the Russian aluminium industry in the Nineties, are involved in any bid for M&S.

Advisers to the Reubens say that the brothers are not interested in backing a bid. But reliable sources say that banks seeking finance for an M&S bid have approached them.

M&S is understood to have sent the Reubens a Section 212 notice - a demand to know whether they have shares in the company - though the Reubens have not yet replied.