LONDON — Marks & Spencer plc scored in its takeover battle with investor Philip Green on Tuesday when Standard Life Investments, which holds over 2 percent of the company, said it supported chief executive Stuart Rose and his plan to revive the retailer’s sagging sales.

This story first appeared in the July 14, 2004 issue of WWD. Subscribe Today.

“Based on the plans laid out on July 12 and following further detailed discussions with the new management, Standard Life Investments has concluded that the proposed bid by Philip Green undervalues M&S’ recovery prospects,” said David Cumming, head of U.K. equities at Standard Life. “Consequently, we have decided to reject the proposed bid.”

Rose will continue talks with M&S’ institutional shareholders this week after the company’s annual general shareholders’ meeting at the Royal Festival Hall here today. As many as 5,000 shareholders may attend the event, and M&S has put up giant screens outside the hall to accommodate those who don’t get in.

The shareholders must decide whether to accept Green’s offer of $7.44, or 4 pounds at current exchange, a share, or trust that Rose will be able to build more value into the M&S share price. Rose said his plan would deliver value “in excess” of $7.44 a share, and some analysts believe he can bump up the M&S share price to as much as $7.99, or 4.30 pounds.

Monday Rose promised shareholders a cash payment of $4.28 billion, or 2.3 billion pounds, in return for siding with the store. The return would come via a tender offer equivalent to $1.86, or 1 pound, a share, a deal financed by the proceeds from the sale of M&S’ financial services arm to HSBC Holdings, the British unit of HSBC Group, the global bank. In his first public remarks about his vision for the retailer, Rose vowed to cut costs, boost margins and blow the dust off M&S’ image with better stores, more attractive merchandise and a new ad campaign.

Green is lobbying shareholders to pressure M&S to open its books to him — something it has refused to do. Green has until Aug. 6, a deadline set by the U.K. Takeover Panel, which monitors mergers and acquisitions, to launch a formal bid, and he needs time to carry out due diligence.

During a conference call Monday, Green urged shareholders to support him. He released a statement Tuesday saying investors holding about 22.6 percent of M&S shares were backing him, including Brandes Investment Partners and Schroder Investment Management.

Green, who is making his second run for M&S in four years, also said he has another 4 to 5 percent of M&S shareholders behind him, though not all have voting rights. Most of them, like Green himself, want M&S to recommend the bid, he said.

Green, who has lined up $20.64 billion, or 11.1 billion pounds, in financing, said he needs at least seven to 10 days to do his research before making a formal bid. M&S has slammed the door three times on Green, who began to make his advances in late May.

Green’s latest bid was for $7.44, or 4 pounds, a share in cash, or $6.23, or 3.35 pounds, a share and a 30 percent equity stub in a new, publicly listed M&S business. M&S said the proposal undervalued the store’s potential.

M&S shares fell 1.24 percent to $6.68, or 3.59 pounds, on the London Stock Exchange Tuesday.