Rose under pressure to deliver or face M&S shareholder revolt

Published on Saturday 10 July 2004 02:33

STUART Rose could face a major shareholder revolt if he refuses to allow Bhs-owner Philip Green to see the books to help him put together a formal bid for Marks & Spencer.

As pressure mounts on Rose, the chief executive, who presents his plans to turnaround the company on Monday, leading shareholders are now understood to be considering requisitioning an extraordinary general meeting to force the M&S board to reconsider Green’s proposal of 400p per share, worth 9.1 billion.

Green’s Revival Acquisitions bidding vehicle claimed in a stock market statement yesterday it now had the support of 22.6 per cent of shareholders.

The largest shareholder, Brandes Investment Partners, which holds 11.7 per cent, and 1.2 per cent shareholder Schroder Investment Management, were said to have offered their support, and more shareholders representing 9.7 per cent were said to "have confirmed they believe the board of M&S should allow Revival access to its requested due diligence on the basis of the proposal set out" on Wednesday.

Richard Buxton, a fund manager at Schroders, said he was "agog" at the M&S stance.

M&S shares stood at 290.5p before Green announced his intention to bid for the retailer on 27 May. Green’s final proposed offer represents a premium of 38 per cent to that price. They jumped 1.2 per cent yesterday to 368p.

Green has made it clear he will not make a formal offer unless he gets the board’s backing.

It was also revealed last night that he had written to the M&S pension trust chairman, David Norgrove, to express his concern at its "apparent decision" not to meet him to discuss the fund’s deficit, believed to be around 670m.

"We’re all focused on Monday now," said a spokesman for Green. The retailer was reported to be taking calls from a number of leading shareholders yesterday, and sources said they were making it clear they would listen to what Rose has to say in his strategy statement, but should they fail to be impressed, they will demand a reversal from the M&S board.

If the traditional behind-the-scenes persuasion fails, they said some are now indicating they are prepared to go public by calling an EGM.

Apart from Brandes, which Green has been courting for weeks, yesterday was thought to be the first time he talked personally to key shareholders.

Paul Mumford, a fund manager at Cavendish Asset Management, said: "Unless the share price moves to over 4 on Monday after the announcement of Rose’s strategy, shareholders could easily be tempted to back the Green bid."