UK - Retail giant Marks and Spencer remains a takeover target and schemes will retain their holdings to capitalise on any future bids, a fund manager predicts.
The firm’s share price fell when billionaire Philip Green – who owns high street rival BHS – withdrew his 400p a share offer. Green claimed that over 25% of shareholders backed his proposal. But the offer – which was dependent on M&S opening its accounts to scrutiny – was withdrawn when the firm refused to comply.
Green launched his bid for M&S at the end of May, and one of the first stumbling blocks was the refusal of the M&S scheme trustees to meet with him.
Aside from M&S opening its books to Green, the bid also hinged on the firm providing detailed information about the scheme’s funding levels.Green’s bid boosted M&S’s share price from 280p in April to an 18-month high of 364p. The price slipped when the bid was withdrawn and further falls are expected.
But Gartmore cautious managed fund co-manager Brian Gallagher says Green’s bid has exposed just how vulnerable M&S is to a takeover. And, he believes that schemes will retain their M&S holdings in the short-to-medium term in order to capitalise on future takeover bids.
He said: “While Green has gone away for the time being, he has left the door open for a third-party approach. M&S is one of the biggest stocks in the market, and therefore pension funds will be very loath to have a zero weighting in the stock when there is likely to be corporate activity in the near future.”
Franklin Templeton portfolio manager Martin Cobb agreed.
“I would have hoped that M&S’s management would have at least had the courtesy to have a dialogue with Green. I’m disappointed that they haven’t done that,” he added.
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