M&S investors approve massive share buyback

Shareholders in Marks & Spencer approved a buyback of up to £2.3 billion of the retailer's shares, although the price will not be set until today at the earliest.

At a sparsely-attended meeting in north London, an overwhelming 99.56 per cent of M&S shareholders voted in favour of Chief Executive Stuart Rose's plan for the largest tender ever held by a UK company for its own shares. The tender, one of the main planks of Rose's July defence against a bid by billionaire tycoon Philip Green, was the only substantive item on the agenda.

Chairman Paul Myners told the roughly 300 mostly elderly private shareholders attending the meeting it was incredible that major institutions had chosen to stay away and vote by proxy. But the tender was the best route forward, he said.

"The tender offer route was chosen because it treats all shareholders equally. (It) will lower the company's cost of capital and improve financial and fiscal efficiency. This will help us create economic value. It will also increase the rate for growth in earnings per share," Mr Myners said.

Despite the strong support for the buyback, there was dissent. Janet Girsman, a 50 year-old political researcher, said she would sell up although she had voted against the operation.

"I've got no confidence in the company. Philip Green valued the company at 400 pence per share, they (Rose's board) weren't offering anything like that," she said.

The strike price, to be set in a range of 332 to 380 pence, will not be published until this week. The announcement is scheduled for today, although it could come as early as the same time today.

The company's registrars, not M&S itself or bookrunners Cazenove, have the responsibility for setting the price as a function of demand. Most analysts expect a premium of a few pence to the current share price.

M&S shares were up 1.2 per cent at 355-3/4p in late morning trade on Friday.

M&S's commitment now has to be to those shareholders that stay in for the long haul, and their best interest is for the strike price to be set as low as possible, maximising the concentration of earnings per share.

The small shareholders that rallied round Rose at the last shareholders' meeting in July are likely to want to hang onto their stakes, and the effect of the tender will be to make them even more powerful as a group.

This hitherto loyal coterie might turn out to be Rose's best bid defence of all, but in the meantime he has to deliver on the rest of his strategy of cutting costs, rejuvenating product ranges and "going back to basics".

And one private shareholder, a woman who said she had worked at head office as a buyer for 37 years, said she was prepared to give the chief executive a little more time.

"It does take a long time to turn the company round, so I'd reserve judgement on Stuart Rose for another year. There's not much he can do about what's already been bought, I don't think he should be going down the same route as Philip Green."