M&S 'notes announcement' on Green takeover plan

A statement issued tonight by M&S after an announcement by retail tycoon Philip Green that he plans to launch a bid for the chain read: “The Board of Marks and Spencer Group notes the announcement made by Revival Acquisitions Limited.

“No proposal has been received at this point. A further announcement will be made as and when appropriate.”

It would be entrepreneur Philip Green's biggest raid yet on the high street. The owner of Arcadia and Bhs said he planned to approach the M&S board in the next few days with an offer that analysts believe could reach £10bn (€14.9bn).

The billionaire announced his intentions just two days after M&S said its sales recovery had faltered in the wake of fierce competition.

Shares in the struggling retailer climbed more than 18% after a statement to the London Stock Exchange said any offer would be made through Revival Acquisitions – a company owned by Mr Green and members of his family.

“Revival intends to approach the board of Marks & Spencer in the next few days with its proposal and to seek a recommendation,” it said in a statement.

Analysts said an offer could spark a bidding war for M&S with private equity groups such as US-based Kohlberg Kravis Roberts thought to be contenders.

It is not yet known how Mr Green, with a personal fortune of £3.6bn (€5.4bn) and a reputation for turning around ailing retailers, will finance a takeover.

But a bigger challenge could be persuading competition chiefs to back the bid as M&S has an 11% share of the clothing market while Arcadia and Bhs are estimated to account for 10%.

Retail analyst Rhys Williams, of stockbrokers Seymour Pierce, said Mr Green had got his timing “spot on”.

“M&S has problems in terms of clothing, its new home launch has not been as successful as hoped, and food is starting to underperform against its peer group such as Waitrose,” he said.

“Add to that a chairman (Luc Vandevelde) who is leaving and a chief executive (Roger Holmes) who is under increasing pressure and you can see why he is keen to enter the market now.”

Henk Potts, of Barclays Stockbrokers, said Mr Green had the “Midas touch” when it came to retailing.

“M&S is the royalty of the UK retailing world and close to the British public’s heart. This would be the jewel in the crown for Philip Green if he pulls this off,” he said.

Mr Green, 52, has long been linked to M&S and appointed financial advisers at the end of 1999 to weigh up the pros and cons of a bid.

An offer failed to materialise and he focused instead on building up a formidable empire of established high street brands that include Miss Selfridge, Top Shop and Dorothy Perkins.

But the entrepreneur was unsuccessful in his attempt to buy Safeway last year, blaming competition hurdles for a decision to pull out of the race.

Mr Green has overseen a dramatic revival in the fortunes of Arcadia and Bhs after swooping to buy the two chains in 2002 and 2000 respectively.

Profits at Arcadia nearly doubled to a record £227.9m (€340.7m) last year on the back of new store openings, cost-cutting measures and a 3.3% hike in sales to £1.8bn (€2.7bn).

At the same time, Bhs was being transformed into an estimated £1bn (€1.5bn) business with annual profits of £105.5m (€157.7m) – the highest level in its 75-year history.