M&S shareholders have to decide where to pitch any offer to sell

Troubled retailer Marks and Spencer is allowing shareholders to sell shares back to the company at a premium of anything up to 10% on Monday's share price, under its buyback offer.

However shareholders who do not take up the M&S offer will also benefit, as their shares will be worth proportionally more in the company after the buyback.

The firm has been under pressure to make some return to shareholders after seeing off Philip Green's offer of 400p per share this summer.

M&S has offered shareholders between 332-380p a share in its desire to buy back �2.3bn of shares.

As can be seen, the mechanism selected by M&S to buy back its shares is not a straightforward purchase of a set number of shares from shareholders at a set price.

Instead a price range is being offered to shareholders, leaving them to pitch their shares to M&S at around a price mark where they think they will eventually be purchased by the firm.

Lucky strike?

Ordinary shareholders can make an offer to sell at any price, of their choosing, within the 332p-to-380p per share price range.

M&S will then examine all the offers to sell, which will have been pitched at different prices in the above range by different shareholders.

It's been a rather funny summer and there's been a lot of distraction around the place with the bid offer going on Stuart Rose, M&S chief executive M&S launches share buyback offer

The directors will then pick the lowest price-per-share that enables it to purchase the �2.3bn of shares it wants to buy back.

This price is known as the "strike price".

All shareholders who tender shares at or below the "strike price" will receive the strike price for each share.

Shares offered for sale above the strike price will lose out and not be bought back by M&S.

Successfully bought shares will then be cancelled, meaning the surviving shares held by shareholders are worth proportionally more, giving them bigger dividends and bigger earnings per share in future.

Financial services sold

M&S is unusual for a FTSE 100 company in that around 20% of its shares are held privately by individuals.

Shareholders do not have to sell using the above buyback mechanism - selling into the current market is one alternative, and not selling at all is another.

The buyback is conditional on shareholder approval from an extraordinary general meeting on 22 October and the closing time and date of the offer is 3pm on that date.

The results of the offer will be announced on 26 October.

M&S said the price range on offer represents a possible 3.9% loss on Monday's middle market closing price of 345.5p or a potential premium of 10%.

Chief executive Stuart Rose has pledged eventually to deliver value "significantly in excess" of Mr Green's summer offer.

The cash return on the share buyback will be financed by the sale of the group's financial services business Marks & Spencer Money to HSBC Holdings PLC and bank facilities.

The range for the buyback is broadly around the market's expected range of 340-375p.