Greenmail is doing the trick

PHILIP Green has proved already that he has travelled an enormous distance since he was tossed out of discount retailer Amber Day 13 years ago after a profit warning, an exodus of non-executives and mystery dealings in the company's shares.

In a matter of days he has forced a dramatic management shake-up at the top of Marks & Spencer and put together the boldest leveraged buyout in British corporate history.

His £8.3bn offer has been dismissed by Paul Myners and Stuart Rose at M&S as having no merit, but for Green it is an enormous achievement.

He has put £1bn of his personal money on the table, rallied much of the financial establishment behind the loan element of his offering and even managed to attract a City bigwig, Lord Stevenson, to his side.

This in itself is an earthquake for M&S. With Green outside the portals of Baker Street, asking the tough questions about the per una clothing range and other issues that have never been answered, M&S cannot slip back into the old complacency.

It is now acknowledged that one of the first tasks for Rose is to sort out the future of the brand created by George Davies, which M&S does not even own.

Disappointment for the 350,000 small shareholders comes from the Green's failure to deliver terms that offer the kind of upside they were hoping for. Expectations that his bid could be worth north of 400p - even as much as 450p - have been bitterly disappointed.

Even on the most optimistic assumptions about how Green could improve M&S earnings over the next few years, taking the 290p-310p cash now and waiting for the uplift in the publicly quoted 'stub' of the company - the 25% left in shareholders' hands - does not look an attractive proposition.

It requires extraordinary faith in Green's management skills and in being a minority in a company where the boss holds all the purse strings, never a happy situation. Yet one still has a sneaking suspicion, given what was achieved at Bhs and Arcadia, that Green is an extraordinary merchandiser who can produce that extra something.

Just as some investors were willing to trust their future to Sir Ken Morrison's paper in the takeover of Safeway, some may believe that in delivery Green has more to offer than Rose, for all his 17 years as an M&S insider.

In recent times the M&S board has not covered itself in glory. Its executive choices have produced a merry-go-round of payments to departing and arriving directors as they jumped off and on the platform.

There have been endless promises of improvements in the supply chain, claims of better quality and more attention to design and fashion. But delivery and execution has been poor and shareholders' money has been scattered on futile projects such as Lifestore, which do nothing but gobble up capital expenditure and disappoint.

M&S will need to do a lot better in explaining itself than it did in the cool response to Green if it wants to keep the predators at bay. Green, trust him or not, has shown that the citadel can be breached.

Investors should hang on. There could yet be more to come.

Headdon escape

THE fresh team of chairman Callum McCarthy and chief executive John Tiner at the Financial Services Authority came to office with a pledge to bring faster and more robust justice to the City.

But if the disciplinary action against Chris Headdon, the former chief executive of Equitable Life is a guide, wrongdoers need have no fear.

Headdon has been judged 'not a fit and proper person' to hold a senior management role in the City. Yet his punishment for this and for leading Equitable to the brink of disaster - putting the savings of up to one million people at risk - is a six-year ban.

This is despite the fact that Headdon and one of his predecessors Roy Ranson, who escaped scot-free, were heavily criticised in the official report into the Equitable mess by Judge Penrose.

By all accounts Headdon was able to strike a deal with the FSA by threatening to drag government officials involved in Equitable regulation before a public tribunal. This was something the FSA and Treasury were doubtless anxious to avoid.

The cave-in by the FSA, which originally wanted a life ban on Headdon, is all the more reason for the Parliamentary Commissioner Ann Abraham to reopen her inquiries into the failings of the regulators in the Equitable crisis. It is on her judgment that the best compensation hopes rest.

Why she should still be hesitating is unclear.