MARKS & Spencer will tomorrow launch a £2.3 billion share buyback that is expected to be priced at a premium to the retailer’s current stock price — but below the 400p offered by the entrepreneur Philip Green earlier this year.
At the same time, M&S will admit that summer trading has again been poor. But the blame will not fall on Stuart Rose, the company’s new chief executive, who arrived too late to have any influence over the retailer’s summer clothing ranges.
The share offer, in which M&S will buy back a quarter of its stock, will be priced in a pre-determined range, to be set by the board this evening. The agreed range is expected to run between 340p and about 375p, compared with the closing share price on Friday of 350¼p.
The final price of the tender will not be set until the end of October, depending on how many shareholders ask to be bought out. However, the company is preparing to offer a modest premium. Early speculation suggested that the final price could be 370p, although there is no certainty that this figure will be achieved.
The M&S board believes that a premium is required to justify the decision of investors who do sell out. However, Mr Rose will want to conserve the company’s cash as far as he can, by keeping the premium as low as is reasonable.
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That will mean that shareholders who do sell will receive less than they might have done if M&S had accepted Mr Green’s proposed 400p a share offer — a result that some small shareholders may find difficult to accept.
Once the price range and trading statement have been announced, shareholders will receive further details in the post before the end of the week.