M&S Shares Surge on Qatar Takeover Speculation

Marks & Spencer shares rose sharply in early London trading following a weekend report in the Sunday Times newspaper that Britain's largest clothing retailer was a buyout of the Qatar Investment Authority.

The investment arm of the Gulf state's sovereign wealth fund had sounded out partners to possibly mount an £8bn ($12.1bn/€9.3bn) bid for the group, the Sunday Times reported without saying where it go the information. It also suggested that the Qatar Investment Authority (QIA), a 26 percent shareholder in Britain's third largest grocer J Sainsbury, had spoken to lenders about financing and had consulted private equity houses - including CVC Capital Partners - in order to gauge their interest in the deal.

Marks & Spencer shares rose nearly 9 percent to 405.97 pence each in the opening minute of trading - the biggest single-day gain in four years - before paring the advance to around 5 percent after a report from the Reuters news agency, which cited an unnamed source, said the QIA was not considering a bid for the retailer.

Bloomberg reported in August of last year that CVC Capital had considered a bid for the Marks & Spencer, citing people close to the situation. The report said the bid may have included keeping some of the company's current senior management and lifted M&S shares to the biggest single-day leap at the time - 8.25 percent - in three years.

In November of last year, M&S reached an agreement with its trustees to fund its pension deficit over the next ten years in a deal that could mean the 130-year old retailer may be sold to private investors.

The funding plan will see the company making annual contributions of around £28m over the next ten years in an effort to plug a £290m "black hole" at the high street retailer's defined benefit pension scheme - a huge decrease from the previous valuation of £1.3bn measured in March of 2009. A reduction on a previously agreed £60m contribution was also reached, the company said in a statement.

M&S is in the middle of a three year, £2.4bn restructuring under CEO Marc Bolland that aims to transition the group from a mainstay on Britain's High Street to a multi-chain, multi-channel international retailer. First half profits rose to just under £300m, the company said on 6 November, although sales growth continues to be an issue in a highly competitive UK market. The group will report its next trading update on 11 April and its full year results on 21 May.