Q&A: M&S takeover battle

Marks & Spencer has been hit by falling sales

The board of Marks & Spencer has rejected the latest takeover offer from billionaire retail tycoon Philip Green.

BBC News Online examines some of the issues behind the increasingly drawn-out struggle for control of the UK High Street icon.

Why has M&S refused Philip Green's offer?

The board of M&S took just 24 hours to consider and refuse Mr Green's �4 a share offer.

It said his bid "continues to undervalue the Group and its prospects significantly".

M&S said there were "major areas of uncertainty" which needed clarifying in relation to Mr Green's bid vehicle Revival and its proposal.

It raised concerns over the characteristics and value of Mr Green's alternative bid, of 335 pence a share in cash and a 30% equity interest in Revival.

M&S said it also wanted to know how Mr Green would deal with the competition issues that would surround a takeover of the group.

What is on the table?

Mr Green's offer values M&S at about �9.1bn ($17bn), and is 8% higher than his previous 370p a share offer made in June.

That offer was also rejected by M&S's board.

As before, Mr Green said his latest offer must receive the recommendation of M&S's board before it can become a formal bid.

M&S's biggest shareholder - US investment group Brandes - agreed to sell its 11.7% stake in the retailer if Mr Green's bid became a formal offer.

Where do the opposing sides stand?

In one corner is Mr Green, one of the UK's most successful retail entrepreneurs and the billionaire owner of department store group Bhs and fashion chains Top Shop, Dorothy Perkins and Miss Selfridge.

In the other corner is the board of M&S and its recently installed and highly respected chief executive Stuart Rose, who took over in June.

The board has rejected all of Mr Green's three approaches - the first was in May - and insists it is capable of turning around M&S's fortunes without the need to sell up.

But despite the latest refusal, Mr Green's manoeuvrings for control of M&S are unlikely to grind to a halt.

He has said his banking advisers will continue to talk to M&S's shareholders about his offer, which he insists is the final one on the table.

"There are going to be a lot of whingeing shareholders," he told Reuters news agency.

The pressure is also on for Mr Rose.

He is due to deliver his recovery plan for M&S, including how to save costs, on Monday.

If Mr Rose fails to impress, those "whingeing shareholders" could find themselves falling in behind Mr Green.

So, is M&S losing money?

No. But it isn't making anywhere near as much money as many people believe it could.

Philip Green has made a success of department store group Bhs

M&S is still a household name in the UK, cherished for decades by millions of shoppers.

But in recent years its fortunes have faded. As fashions have changed and consumer expectations shifted, the company's offerings have been seen as increasingly outdated.

M&S still makes money - it reported pre-tax profits of �739.8m for 2003 - but crucially its like-for-like sales have been falling.

Has Philip Green the pedigree to turn M&S around?

He's done something like it before. When Mr Green took control of Bhs in 2000, the department store chain was seen as a shadow of its former self.

Bhs's 160 shops are now worth five times the �200m he paid for them.

Mr Green is also credited with increasing the fortunes of fashion group Arcadia, owner of his High Street fashion chains, which he bought for �770m in 2002.

What would a successful bid from Mr Green mean for M&S customers?

At the heart of any revival plan for M&S is the need to restore its reputation among shoppers while pursuing a strategy that will turn around declining sales.

Innovations such as M&S's recently launched Lifestores furnishing shop and Per Una fashion label could fall by the wayside as part of a general shake-up.

Mr Green is also rumoured to be considering reintroducing the group's St Michael label, the once famous symbol of M&S which in recent years was seen as symptom of the company's fall from grace.

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