M&S 'targeted' amid shares slide and anti-Bolland talk

Aug 6, 2012

Talk of private equity takeover in the air as fashion and food chain finds itself in doldrums again

MARKS & SPENCER has refused to comment on a weekend report that the fashion and food chain whose shares have fallen by half since before the 2008 recession might be the target of a £6bn takeover bid.

The Sunday Telegraph reports City gossip that Bank of America Merrill Lynch has been assessing "the possibility of providing debt finance for a speculative bid".

Another rumour is that a large private equity institution – so far unnamed - is considering a public-to-private takeover of M&S. According to the Telegraph's source, "the private equity house is so set on pursuing a bid... that retail executives had been approached about backing some form of approach".

The revelations follow a Bloomberg report last week saying the high street retailer was vulnerable to a bid because it is currently valued cheaper than 85 per cent of similar-sized chains worldwide.

Paul Mumford, a fund manager at Cavendish Asset Management, told Bloomberg: "It would be perfect for a private-equity firm. It's cash generative, it has a decent brand name, a food side which gives it a defensive quality and a portfolio of shop property in fairly prime positions."

Marc Bolland, who took over from Stuart Rose as chief executive of M&S in 2010, has been widely criticised for his strategy for the company, amid falling women's wear sales and difficulties in the retailer's supply chain.

It is eight years since M&S rejected a £9.1 billion bid by Sir Philip Green, whose Arcadia group owns Topshop, Dorothy Perkins and Miss Selfridge. Green was offering £4 per share.

Under Stuart Rose's stewardship, M&S shares went on to peak above £7 in both 2006 and 2007. On Friday night, before the takeover rumours started, they stood at £3.41.

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