Bhs chief quits after takeover bid rebuffed

Terry Green, the chief executive of Bhs, is to step down next month and set up a rival venture after his attempt to buy the retailer was rebuffed by its billionaire owner Philip Green.

Terry Green, who is no relation of Philip, wanted to lead a management buyout of Bhs and was backed by the private equity firm PPM Ventures. The deal would have netted more than £800m for Philip Green and his family.

The offer was made in November, when Bhs expected to make pre-tax profits of between £70m and £80m.

Philip Green rejected the offer chiefly because the figure was too low. The veteran entrepreneur has also decided that the time is not right to float or sell the business.

It also emerged over the weekend that Bhs would this week announce far higher profits for the year to 31 March than the £92mforecast by analysts.

Philip and Terry Green, two of the most ambitious executives in the retailing sector, have managed to turn Bhs around dramatically since Philip Green bought it for £200m in 1999. They have boosted profits from £12m in 1999 to more than £100m last year.

Terry Green was responsible for investing £25m to revamp Bhs' network of stores. He also found new suppliers in central and east Europe, instead of relying on Bhs' traditional supply base in the Far East.

But he has become frustrated that his boss will not float the business, which would have entitled him to a substantial windfall to reflect the work he has put into BHS.

He is expected to officially announce that he will leave and has agreed to a pay-off along with Bhs' results on Wednesday.

Terry Green, who was chief executive of Debenhams, will now turn his attentions to repeating his success at a new company, probably by trying to buy a struggling retail chain for himself and turning it around.

He is understood to be in talks to acquire Rubicon, which owns Principles and a number of other retail brands. He wants to pay up to £60m for Rubicon -- spun out of Arcadia last year to its management team for £35m. If he buys Rubicon, which also owns the high-street brands Warehouse and Racing Green, it will guard Arcadia against further criticism for holding on to its 45 per cent stake in the business.

Meanwhile, Philip Green is preparing to pay himself a salary of about £180m in a form of a special dividend from Bhs.

The City has been expecting the results to include a large payment to the company's owner, but the level of the dividend – which is equivalent to £500,000 for every day of the year – may surprise some observers.

Philip Green has had a rocky ride in his relationship with the City, especially after an abortive attempt to buy Marks & Spencer. But he is acknowledged to be one of the fastest-made billionaires in the UK due to the fortunes of Bhs. Having bought it for £200m, which included loans of £150m, the company is now valued by analysts at £1.2bn.