Shareholders prepare for losses after M&S sees off bid challenge

Philip Green loses ill-tempered high street battle. Private investors give him the thumbs down

Marks & Spencer shares are expected to fall today after Philip Green dramatically announced his decision to pull out of his £9.1bn bid attempt for the retailer.

The Bhs entrepreneur last night announced he was quitting the race for the retailer after failing to persuade the M&S board to meet him to discuss his 400p-a-share proposal and allow him to carry out due diligence.

His £9.1bn takeover plan has been thwarted even though he won support from 34 per cent of the company's shareholders for talks to begin.

Mr Green's exasperation was compounded by a statement early yesterday from Brandes Investment Partners, M&S's biggest single shareholder with 11.7 per cent, backing his calls to be allowed to carry out due diligence on the retailer. But the Brandes statement failed to move the M&S board, which was gathered in London yesterday for the company's annual meeting.

Mr Green's Revival Acquisitions announced last night: "Revival has concluded from today's M&S AGM statement and conversations with Paul Myners [M&S chairman] that Revival will not gain the co-operation of the board of M&S to provide it access to the information necessary for [it] to make its offer. Since it has never been Revival's intention to disrupt the business of M&S, Revival is making this announcement promptly and wishes to thank the M&S employees and shareholders who have expressed their support."

The battle for M&S has been one of the most colourful City contests in years. The Green camp, advised by Goldman Sachs and Merrill Lynch, has brought together some of the Square Mile's biggest lenders to support the bid. It has been marred by a Financial Services Authority investigation into dealing in M&S shares and derivatives, and dirty tricks allegations.

Despite Revival's conciliatory tone last night, Mr Green is furious the board refused to meet him. However, a spokes-man for M&S said the central issue had never been one of whether to allow Mr Green due diligence access but instead came down to a question of value.

"The board's view has consistently been that 400p-a-share undervalues the company. It is hard to find an analyst's note that doesn't confirm that the Stuart Rose agenda adds up to more than £4," the spokesman said.

The M&S position yesterday was that if Mr Green disagreed with the board he had other options open to him. The M&S spokesman said: "If a bidder disagrees with a board on value then they ... can bypass the board and go direct to shareholders. Put the cash on the table and say, 'you choose'. Green had that option."

Mr Green had believed that the backing of Brandes for due diligence talks between the two camps might have been enough to sway the M&S board and its advisers, Citigroup, Morgan Stanley and Cazenove.

In a statement, Brandes said it had indicated to the M&S board "its continued support for due diligence discussions between M&S and Revival".

"Brandes takes a conservative view regarding the timing, achievability and retention for shareholders of the margin and cost benefits outlined by M&S. Brandes believes it would be in its clients' interests to have an opportunity to consider a formal £4 cash offer from Revival."