Marks & Spencer shares in the red as shareholders fail to fully back £600m Ocado deal cash-call

Marks & Spencer shares in the red as shareholders fail to fully back £600m Ocado deal cash-call

Marks & Spencer shares in the red as shareholders fail to fully back £600m Ocado deal cash-callJust over 85% of investors opted to

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Marks & Spencer shares in the red as shareholders fail to fully back £600m Ocado deal cash-call

  • Just over 85% of investors opted to take up a slice of its £600m rights issue
  • Shortfall meant underwriters had to find other buyers for the rest of the shares

Shares in Marks & Spencer have fallen today after the group unveiled the results of its investor cash call. 

Just over 85 per cent of the retailer’s shareholders opted to take up a slice of its £600million rights issue, which was launched to fund its joint venture deal with Ocado.

This shortfall meant the group’s underwriters had to find buyers for the remaining 15 per cent of shares not snapped up. 

In the red: Shares in Marks & Spencer have fallen today after the group revealed its latest investor cash-call received a lukewarm response

In the red: Shares in Marks & Spencer have fallen today after the group revealed its latest investor cash-call received a lukewarm response

In a subsequent statement, M&S said that the underwriters, namely Morgan Stanley, BNP Paribas, HSBC and Shore Capital, had found subscribers for all of the remaining 48,269,255 new ordinary shares, representing around 14.86 per cent of the remaining offering, at a price of 211p each.  

The FTSE-100-listed group’s share price is down 2.37 per cent or 5.20p to 214p. 

M&S launched its £601.3million rights issue last month, offering one share for every five currently held, to help fund the deal with Ocado to boost its food offering and online delivery service.

Investors and analysts have expressed concern about the deal, which will see M&S spend £750million to buy half of Ocado’s UK retail business. Some analysts have said M&S is paying a high price.

Independent retail analyst Nick Bubb said M&S saw a ‘reasonably good’ response to the rights issue.

He added: ‘Despite all the bad vibes about current trading and the second thoughts in some quarters about the wisdom of the Ocado deal, the £600 million rights issue was sizeable enough to preserve M&S’s fragile hold on its place in the FTSE 100 index in the recent review and it was deeply discounted enough to encourage a reasonably good take-up from shareholders.’

In charge: Marks & Spencer boss Steve Rowe

In charge: Marks & Spencer boss Steve Rowe 

M&S has a large army of small retail investors, who account for 20 per cent of its shareholder base, many of which hold shares in their own name, which is understood to be a limiting factor in the take-up of its rights issue. 

The retailer recently narrowly avoided being booted out of the FTSE 100 index after its shares fell by nearly a fifth over the last six months.

M&S posted a 10 per cent drop in annual underlying pre-tax profits last month to £523.2million for the year to 30 March.

It also outlined plans to close a further 85 full-line stores and around 25 Simply Food outlets, on top of the 35 full-line branches closed in the last year.

The group has said the overall size of the chain will remain in line with previously announced plans, as it also opens and relocates shops, having launched another 48 full-service stores in the past financial year.            

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