M&S: 'No' to Green £9bn bid

PHILIP Green today launched his £9bn bid assault on High Street icon Marks & Spencer, but it was swiftly rejected by the group as 'significantly' undervaluing the company and its prospects.

The board, now led by Stuart Rose, said it is 'currently in the early stages of re-examining all aspects of its business in order to maximise value creation for its shareholders. Marks & Spencer shareholders will retain 100% of this value creation.'

Monaco-based billionaire Green stopped short of launching a formal offer but said it was his 'firm intention' to make a bid - but only if he secures a recommendation from the board.

He also wants answers to a number of key questions, including details of George Davies' Per Una contract. The M&S camp insisted, however, that they will not provide any answers: 'He is a competitor. We will not give him confidential information,' said one adviser.

Outline terms of his deal are a cash payment of between 290p and 310p a share, plus a 25% stake in bid vehicle Revival Acquisitions.

The value of the stake in what would be a heavily indebted new company is an unknown quantity, but could be as high as 100p a share, taking the terms to between 390p and 410p, or as low as 31p a share, cutting the outline terms of the deal to between 321p and 341p.

Green says he is prepared to pay the higher cash price of 310p only if he is permitted to see - and is satisfied with - the full details of the Davies deal. Otherwise, the cash element will be cut by 20p a share, equivalent to just over £450m in total.

The City was swift to register its disappointment with the outline terms of the deal. Expectations have been raised since the weekend appointment of former Arcadia boss Rose as chief executive. He is seen as a credible defender of Britain's biggest clothing retailer.

'It's a non-starter,' said Paul Mumford of Cavendish Asset Management. 'Investors do not want to be minority shareholders in a highly-geared vehicle.'

Robert Talbut, chief investment manager at Isis, said he saw today's terms as 'an initial offer rather than a knockout blow'.

He added: 'But M&S will probably have to provide some of the extra information that Green wants, particularly details of the deal with George Davies.'

Green says he is prepared to put £1.05bn of his own family money into the offer, and his five banks - HBOS, Goldman Sachs, Halifax, Merrill Lynch and Royal Bank of Scotland - are providing £7.5bn. A further £450m is coming from HBOS, Goldman Sachs and Barclays Capital.

Asked if he would be prepared to go hostile, Green said: 'I don't want things to get messy. Marks & Spencer has 350,000 private shareholders. It is the largest shareholder base in the country. The question is: Do they want to have a ride with me or stay where they are?.'

Crucial questions to be answered

THE M&S contract with Per Una designer George Davies was centre-stage once again today, as Green demanded to know terms and conditions of the secret deal before going ahead with a formal bid.

He wants answers to a number of other key questions, including:

Confirmation that the M&S pension schemes are fully funded or not - and if not, by how much they are underfunded and on what basis - and details of current and future annual cash contributions being made.

Details of committed capital spending plans, split between the group's Simply Food chain, its Per Una stand-alone stores, homewares venture Lifestore and any other spending plans.

Information on trading at the group for the past six weeks.

Green says he is prepared to pay the higher cash price of 310p only if he is permitted to see - and is satisfied with - the full details of the Davies deal. Otherwise, the cash element will be cut by 20p a share, a reduction of £450 million in total.

In threatening lower terms if the details are not disclosed, Green is attempting to pressure the board into disclosure.

The Davies contract was at the centre of Green's court setback yesterday over his legal firm, Freshfields. The High Court ruled in favour of M&S's claim that Freshfields presented a conflict of interest, having acted for M&S in drawing up the Davies contract.

The injunction remains in place and Green has hired Ashurst Morris as his new legal advisers.

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