Philip Green, the entrepreneur, is expected to make a third bid for Marks & Spencer after the retailer last night rejected a revised £8.4 billion offer.
Marks & Spencer took just an hour to turn down Mr Green’s second bid, pitched at 370p per share in cash, saying it “would significantly undervalue the group and its prospects”.
The offer, which was backed by £1.1 billion of Mr Green’s own money, was worth £11.9 billion once the value of M&S’s debts and working capital were included.
However, some analysts said that they expected Mr Green to return with a further proposal, which could be backed by equity in a post-takeover M&S.
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Sundeep Bahanda, Deutsche Bank analyst, said: “We think Green will come back with another sweetener - cash plus shares.”
“If Green could come back with a proposal that is closer to the 400p [a share] mark investors want… then we believe it would be very difficult for M&S to turn him away for a third time.”
Richard Ratner, the Seymour Pierce analyst, nonetheless questioned Mr Green’s scope for improving his bid.
“If [shareholders] want 400p, they’re not going to get it,” Mr Ratner said.
“There may be another 5-10p in the pot but that’s about all I would have thought.”
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Mr Green, who has said he is seeking an agreed takeover, might be tempted to launch a hostile bid, the analyst added.
Stuart Rose, installed as M&S chief executive two weeks ago after Mr Green unveiled his original £7 billion cash-and-shares offer, said this morning that the company had a “duty” to discuss a third offer.
However, he stressed the company’s desire to pursue its own growth agenda.
“I’m comfortable that when shareholders see our plans in July they will be behind us,” Mr Rose told the BBC.
Marks & Spencer shares stood 9.5p lower at 354p in afternoon trade.