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Wednesday, 23 January, 2002, 12:41 GMT
M&S shareholders get 2bn windfall
Model wearing M&S clothes
All smiles as M&S shares yield hard cash
UK retail giant Marks & Spencer has unveiled plans to reward its long-suffering shareholders with a 2bn cashback scheme.

The windfall - equivalent to 70p per share - is designed to compensate investors who watched the value of their M&S holdings drop steeply during the late 1990s as the High Street stalwart fell out of favour with shoppers.


Some investors may want to own the stock so they can benefit from the recovery

Ashley Willing, Gartmore Investment Management
The company's share price has recovered in line with rising sales figures, proving one of the London stock market's stars of 2001.

But the shares are still worth little more than half what they were at their 1997 peak.

M&S stock closed 3p higher at 369.5p on Wednesday.

Shareholder jackpot

The company said it has raised the 2bn shareholder jackpot by selling property and some subsidiaries, and by taking on an undisclosed amount of debt.

Under the cashback scheme, investors will be allocated 17 new ordinary shares and 21 new 'B' shares - which do not confer voting rights - for every 21 ordinary shares they already hold.

They will be entitled to cash in the non-voting B shares for 70p each at six-monthly intervals starting on 25 March.

M&S said it opted for a share transfer mechanism rather than a straightforward buy-back in order to avoid a sudden hike in its share price.

Shareholder approval pending

The scheme, which M&S first outlined last year, needs the backing of the shareholders themselves before it can proceed, with a vote scheduled for 28 February.

Once shareholders have backed the plan, it must also be rubber-stamped by the UK High Court.

Luc Vandevelde, M&S chairman and chief executive
Luc Vandevelde appears to have turned M&S round

M&S said that if the scheme does go ahead, it expects most shareholders to take up the option of cashing in the new shares.

Investors by and large welcomed the move.

"It makes good use of the excess capital in the business," said Ashley Willing, a fund manager at Gartmore Investment Management.

"We will probably cash in the B shares straight away, but some investors may want to own the stock so they can benefit from the recovery."

Turnaround

M&S shares, which were the FTSE 100's best performer last year, have been tipped by many analysts as likely to continue climbing as the retailer's recovery gathers pace this year.

Earlier this month, the company beat City forecasts by reporting an 8.3% year-on-year increase in sales in the Christmas period.

Initial signs of a recovery came in September, when the firm announced a 20% jump in profits.

The figures helped to convince investors that the retailer has, under the leadership of Luc Vandevelde, managed to pull itself out of a two-year slump.

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