This is Green's second bid for M&S

The businessman who owns Bhs and Arcadia is said to be prepared to invest up to �1bn of his personal fortune in the venture.

But the Financial Services Authority has said it is to investigate a surge in M&S shares ahead of Mr Green's bid last Thursday.

The body was contacted when M&S shares traded reached abnormally high levels.

M&S probe

"The FSA has noted the price movement prior to the announcement and in line with our policy of reviewing all suspicious price movements is reviewing trading in Marks & Spencer shares and related derivatives," the FSA said.

M&S is to launch its own inquiry into who the owners of its stock will eventually be, The Mail on Sunday and The Sunday Times report.

It's a great British institution, what we're interested in doing is to help rebuild it Philip Green, retailer Profile: Philip Green Is Marks & Spencer's decline terminal?

The company has sent about 20 "212 notices" to shareholders demanding to know the origin of their owners.

Meanwhile, shareholders are calling for Luc Vandevelde, the part-time chairman who has hinted he is ready to go, to quit immediately, The Independent on Sunday reports.

They want a top retailer brought in, with former Arcadia boss Stuart Ross a favourite, the newspaper says.

'400p a share'

M&S saw sales slide this year, provoking concern the company's recovery from the late 1990s sales slump had stalled.

Mr Green's bid is now expected to include a cash and shares offer of around 400 pence a share, according to the Observer newspaper.

M&S has seen sales slide this year

It is understood that he has secured finance from HBOS, Royal Bank of Scotland and Barclays Capital, while Goldman Sachs and Merrill Lynch are willing to underwrite part of the deal.

The tycoon is also expected to revive the St Michael brand, shed by the current M&S management.

This is not the first time Mr Green has made a play for M&S.

He made an offer for the company in 1999 which was later withdrawn.

This time round, Mr Green could face competition from a counter bid from venture capitalists led by KKR, Carlysle Group, Permira and CVC, the Observer says.

"This is unquestionably an icon business," Mr Green told The Sunday Telegraph.