It is a further piece of good fortune for Philip Green that he should have been able to announce last week to his Arcadia staff and shareholders (the latter being represented principally by Tina, his wife) that he was paying an unprecedented dividend just as Marks & Spencer was buying back its own shares. But you make your own luck.
No one could argue that Green hasn’t made his – and his old business partner and adversary, Stuart Rose, who firmly grasps the poisoned chalice as chief executive of Marks & Spencer, is likewise now the author of his own fate. The difference in value between the Bhs-to-Top Shop conglomerate and M&S – often quite difficult to identify at product level – could hardly be thrown into starker relief at corporate level.
There is some sense in which there is a popular justice in the relative positions of these two retailers. M&S’s Rose is the smooth, feline professional, reminiscent of a dying age of manners in the City, when it mattered more who you were and how you sounded than what you actually did. Green is a meritocrat and high street fighter, who tries hard not to care what people think of him – a symbol of a new kind of business personality that is unencumbered by class consciousness. Rose is a suit; Green sells them.
It would be similarly popular to cast Green’s two plays for M&S – and the prospect of a third – as the renegade versus the old order, with M&S’s shareholders being denied the value that Green could deliver them by self-serving City types. But all is not as it seems and it’s worth looking behind the drama to see what’s going on, like peeping behind theatre scenery at the ropes and gummed canvas.
The most common misconception around is that M&S has just conducted its tender offer for its own shares at a deep discount to Green’s putative 400p-per-share offer of earlier this year. In reality, no such takeover bid was ever launched. Green’s offer was only ever indicative. Far from defeat by M&S’s institutional shareholders, it is said that Green threw in his Monaco beach-towel in exasperation, when he saw M&S shareholders expressing their resistance to him on television.
Perhaps more realistically, we can assume that other factors scared Green away, if only temporarily – not least the mysteries of M&S’s pensions pot. And it concentrates your mind no end, I imagine, when so much of your own money is at stake. I see that the £650m that the Green family has taken in dividend income this year is now said to be from companies in which he originally staked “only £89m of his own money”. When commentators speak like that, they have lost touch with the level of risk being taken. We can be sure that Green knew the level of personal wealth he was about to put on the line for M&S. In short, though for entirely sound and sensible reasons, he bottled it.
But if the grass is not as it seems on Green’s side of the fence, then there are even thinner patches on the M&S lawn. At the extraordinary meeting at Wembley Conference Centre (another symbol of a bygone age) last week, the thoroughly City-oriented chairman of M&S, Paul Myners, said to enthusiastic applause that Green had “made a great deal of money for himself and his bankers. It is mine and Stuart Rose’s intention to make a great deal of money for you, our shareholders.” This strikes me as an extraordinary statement as much as an extraordinary meeting.
First of all, Green has done precisely what Myners and Rose claim they intend to do – he has made a great deal of money for shareholders. The fact that Green’s shareholders are principally himself and his family is irrelevant in this context.
Myners will have spent much of his career, as chairman of Gartmore Investment Management, trying to attract families like the Greens to invest in his funds, but neither he nor those funds will ever have created anything like the wealth that Green has created. Rose similarly did a great job in turning around Arcadia before selling it to Green, but he’s in a lower retail-management league.
To suggest that they intend to make M&S’s shareholders richer than Green has made himself is, frankly, taking the mickey.
M&S also passed off the deeply discounted tender offer as being mindful not to transfer value from existing to exiting shareholders. For that remark to have any value, Myners and Rose must now deliver 400p-per-share by means other than Green. People often talk of Green shooting his mouth off. But M&S now has to put his kind of money where its mouth is. The time for talk is over.
George Pitcher is a partner at communications management consultancy Luther Pendragon