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Marks & Spencer buyout mulled by US investment giant

By Huw Hughes

Nov. 22, 2021

Business

Image: Marks & Spencer, Facebook

US investment firm Apollo Global Management is reportedly mulling a buyout of Marks & Spencer.

The New York-based firm considers the British retailer’s share price to be unreasonably weighed down by the pandemic, The Sunday Times reports, citing City sources.

Apollo also thinks not enough value has been attributed to the 50 percent stake Marks & Spencer has in the retail business of online grocery solutions and logistics business Ocado.

Marks & Spencer acquired the Ocado stake in 2019 for 750 million pounds, a significant move that allowed its customers for the first time to buy food online through the Ocado website.

But The Sunday Times added that it’s unclear whether a recent increase in Marks & Spencer’s share price following upgraded profit guidance earlier this month has dampened Apollo’s interest in a buyout.

Marks & Spencer shares rise on buyout speculation

The retailer’s share price further increased to 2.48 pounds on Monday following the news. But that was still far off the company’s all-time high price of over 7 pounds back in 2007.

In the six months to October 2, Marks & Spencer reported a pretax adjusted profit of 269.4 million pounds compared to a loss of 17.4 million pounds a year earlier.

The figure was also up 53 percent compared to the profit of 176.3 million pounds it made two years ago, prior to the pandemic.

First-half sales at the retailer’s clothing and home division were just 1 percent below 2019 levels, despite lockdown extending into the first week of the period.

And in the second quarter, clothing and home sales grew compared to two years ago, with overall full-price sales up 17.3 percent.

Following the results, Marks & Spencer raised its full-year guidance. It expects profit before tax and adjusting items to be in the region of 500 million pounds, compared to its previous estimate of between 300 million pounds to 350 million pounds.

But it also warned of “significant supply chain cost increases” in the second half of the year.