LONDON — Investor Philip Green surrendered Wednesday night in his seven-week battle to take over Marks & Spencer, Britain’s largest retailer, saying the refusal of the store’s board to give him permission to examine financial information forced his withdrawal.
This story first appeared in the July 15, 2004 issue of WWD. Subscribe Today.
“We gave it our best shot, but the M&S board wouldn’t engage with us,” Green told WWD in a telephone interview. “We are talking about nearly $20 billion at stake here — and I couldn’t carry out due diligence or have access to the pension fund details.”
Asked whether he would make another takeover attempt in the future, Green said: “I just don’t know. Tonight is what it is, and I am tired.”
Green had been racing against the clock since last week, when the U.K.’s Takeover Panel, which monitors mergers and acquisitions, gave him until Aug. 6 to make a formal bid. Green had refused until he was allowed to study the retailer’s books.
Century-old Marks & Spencer has been losing sales to lower-priced, trendier clothing outlets such as Topshop, which is owned by Green, and Hennes & Mauritz. The company’s new chief executive, Stuart Rose, said on Monday that “our core customers have been neglected, confused and disappointed,’’ and he pledged to “focus on the product — and the customer.’’
Green had made three informal bid proposals through his company, Revival Acquisitions Ltd, the latest valuing the company at $16.92 billion (9.1 billion pounds). He said in a statement he withdrew after conversations with M&S chairman Paul Myners, and the M&S general shareholders’ meeting earlier on Wednesday. Revival said it reserves the right to make another bid within six months.
Hours before giving up the chase, Green had issued a statement saying shareholders representing 34 percent of M&S said they believed the board should open its books so that Revival could undertake its due diligence.
Among them was Brandes Investment Partners LLC, a San Diego-based investment adviser with an 11.7 percent stake in M&S, which said in a separate statement Wednesday that M&S should provide Green with access.
This was Green’s second run for the store in four years, and he had lined up $20.64 (11.1 billion pounds) in financing. The board of M&S had rejected all three of Green’s offers, saying they undervalued the company.
Green’s latest offer was an all-cash proposal of $7.44 (4 pounds) per share offer, or $6.23 (3.35 pounds) per share, and a 30 percent equity stub in a new, publicly listed M&S business.
During the M&S shareholders’ meeting at the Royal Festival Hall on Wednesday — the largest in the history of the firm — Myners reiterated the store’s position on Green’s latest proposal.
“It continues to undervalue the group and its prospects,” Myners told some 2,800 shareholders who had waited on line in the mid-summer cold and drizzle to attend the meeting. “We are not prepared to recommend an offer at that level.”
Smaller shareholders rallied behind Rose, who began his career in the retailer’s food division and was picked to lead M&S as Green sought to buy the firm. Rose has outlined a strategy to slash costs and plump up margins. He has also promised shareholders a cash payment of $4.28 billion (2.3 billion pounds) in return for rejecting Green. The return will come via a tender offer equivalent to $1.86 (1 pound) per share.
Some analysts said Rose can boost the M&S share price to as much as $7.99 (4.30 pounds) per share. M&S shares closed up 1.25 percent at $6.77 on the London Stock Exchange Wednesday.
It wasn’t difficult to gauge where the shareholders — most of them white-haired pensioners with M&S shares they’ve been holding for decades — stood at the meeting. They overwhelmingly approved the appointment of Rose and his new management team.
During question-and-answer time, one shareholder praised Green and urged the audience to sell their shares to him. But before he could even finish his sentence, spectators began booing him loudly and chanting: “No! No! No!”
Others who took the microphone said they were wary of Green. “Welcome back, Stuart,” said Barry Hyman, a former M&S employee. “I prefer to have an M&S through rose-tinted spectacles than one that’s green around the gills.”
The 55-year-old Rose began his career in the food division of M&S in 1972 and spent 17 years there before joining the Burton Group. In 2000, Rose turned around the ailing Arcadia group — which Green purchased two years later.