M&S Shares Surge Amid Takeover Talk

Shares in Marks & Spencer have risen by up to 8% on the FTSE 100 today on speculation it is being stalked by Middle Eastern investors.

M&S, which has been no stranger to bid talk in recent months, has so far refused to comment on a report that a consortium led by the Qatar Investment Authority (QIA) was considering an £8bn bid.

According to The Sunday Times, the Gulf state's sovereign wealth fund is in talks with private equity and banks about an approach with any bid promising to be the biggest private equity takeover of a British blue chip firm since Alliance Boots was snapped up by KKR for £11bn in 2007.

Tough spending conditions on the high street have hit the M&S share price, which has falled 70% in the last year alone.

Clothing sales have struggled in particular and a turnaround plan by chief executive Marc Bolland, including a new management team for the division, is not expected to deliver results until the summer.

The weak pound, coupled with the share price, makes M&S attractive to bidders.

However, there are significant hurdles in the way of an offer. Aside from the price tag needed to win over management and investors, M&S has a hefty pension deficit of about £300m which means the scheme's trustees have a big say in any deal.

Other bidders have tried and failed to bag M&S in the past, with BHS and Topshop tycoon Sir Philip Green launching an unsuccessful hostile £10b bid in 2004.

QIA's Qatar Holding subsidiary bought Harrods three years ago for £1.5bn and it has a 25% stake in supermarket Sainsbury's.

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