M&S: Next 24 hours crucial for bid

THE fate of Marks & Spencer is likely to be decided in the next 24 hours, with billionaire Philip Green now thought unlikely to continue his assault on Britain's biggest clothing retailer if he fails to drum up enough support from shareholders ahead of tomorrow's annual general meeting.

As the City continued to crunch the numbers contained in chief executive Stuart Rose's masterplan, there was intense lobbying of shareholders by both sides.

This afternoon there was good news for M&S when Standard Life Investments (SLI), which has a 2% stake in M&S, said it had decided to reject the terms of the possible offer from the Bhs and Arcadia owner.

Green is urging investors to use the AGM to demand M&S considers his proposed 400p-a-share takeover offer.

He said today that holders of shares and derivatives representing 14.1% of the company supported his call that M&S open up its books, although this includes 8.3% held through derivative contracts, which do not always carry voting rights.

His backing from holders of ordinary shares has gone up since the weekend from 1.8% to 5.8%. Along with the 11.7% controlled by US funds firm Brandes and the 1.2% Schroders stake, this takes Green's level of support from 22.6% to 27%. However, Brandes and Schroders have said their backing is conditional on a board recommendation.

M&S dismissed the new figures, saying: 'These are unnamed shareholders and CFD holders. After all Philip Green's bluster, we were expecting more.'

Launching another attack on M&S directors, Green said: 'Every day a new obstacle course is created - now we find that George Davies can take the per una brand away with him if there is a change of control and that the financial services deal cannot be unpicked. Meanwhile, the pension trustees remain in hiding. Can this be the way to run a public company in the best interests of shareholders?'

After yesterday's crucial presentation, Rose is preparing for his next big challenge - tomorrow's AGM.

'It's the biggest show in town and we're clearly going to get a large turnout,' he said. 'We have put our best foot forward, but never underestimate your opponent - especially when he's called Philip Green. He's got a very big tank on our lawn.'

Shareholder pressure looks to be Green's last chance to persuade Rose to open the books to him. Green has said he will not go hostile and, if sufficient shareholders fail to back him, he will have little choice but to abandon his bid plans. M&S shares today shed 2 3/4p to 361 3/4p.

Takeover funding in place

GREEN today confirmed in a statement from his Revival Acquisitions vehicle that funding of £11.1bn has been put together for the Marks & Spencer bid, subject to documentation.

The Monaco-based billionaire is prepared to put half his family wealth into the offer, providing up to £1.6bn for the equity funding portion of the proposed £9.1bn deal. Some £1.4bn is to come from HBOS, Goldman Sachs, and Barclays Capital.

The debt financing of £8.1bn is to come from Barclays Capital, Goldman Sachs, Halifax, Merrill Lynch and Royal Bank of Scotland.

Second credit rating blow

M&S saw its long-term credit rating cut by a second agency today with Moody's reducing its rating by two notches to Baa2 - just above junk status. It reflects the impact on the group's finances of Rose's 100p-a-share cash giveaway.

If Green's highly-leveraged bid were to proceed, M&S's rating would be slashed to junk status. If he abandons his plans, Moody's said it 'would expect to confirm Marks & Spencer's rating at the current new levels, though the outlook could be negative'.

Yesterday, Standard & Poor's cut its long-term rating for M&S by three notches, to BBB, also just above junk.