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(Sharecast News) - Shares in Marks & Spencer jumped on Monday after it was reported that an investment firm was interested in the high street stalwart.
According to The Sunday Times, Apollo Global Management has been "running the rule" over the FTSE 250 retailer, which last week posted better-than-expected interim results and upped its full-year profit guidance.
Citing unnamed City sources, the newspaper said Apollo considered M&S a "bargain" as its shares were undervalued. In particular, Apollo believes the market is overplaying the impact of the pandemic on the stock and under-appreciates its 50% stake in Ocado's retail business.
However, it remains unclear if recent gains in the share price have dampened Apollo's interest, the report acknowledged.
Shares in M&S, which by 1000 GMT were trading 3% higher at 248.7p, have put on 40% over the last month.
Nick Bubb, retail analyst, noted: "If Apollo is serious about bidding for M&S, they've left it a bit late, given the big recovery in the share price."
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: "It's unlikely to be lingerie sales which have made M&S an attractive prospect, instead its food aisles and in particular the tie-up with Ocado which will be the allure.
"Apollo has flirted with other acquisitions in the UK grocery sector, losing out in its quest for Asda, and then pulling out after making advances for Morrisons. Given its thwarted attempts so far, there is growing expectation that the group may make an offer for the company, particularly given that food was such a star performer in the last set of results.
"Apollo will be weighing up the future value of Marks and Spencer's e-commerce tie-up with Ocado, and speculation that its success so far may lead the retailer to buy out Ocado's 50% share indicates the weight of expectation about its growth prospects. However, shares have surged more than 27% since those impressive results and if the price continues to climb, there is a chance Apollo may turn into more of a reluctant suitor."
Neither Apollo nor M&S have commented on the report.
1 Nov 2023 15:44
UK earnings, trading statements calendar - next 7 days
| Thursday 2 November | |
| BT Group PLC | Half Year Results |
| Derwent London PLC | Trading Statement |
| Entain PLC | Trading Statement |
| Haleon PLC | Q3 Results |
| Helios Towers PLC | Q3 Results |
| Hikma Pharmaceuticals PLC | Trading Statement |
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| OSB Group PLC | Trading Statement |
| Shell PLC | Q3 Results |
| Smith & Nephew PLC | Q3 Results |
| TI Fluid Systems PLC | Trading Statement |
| Trainline PLC | Half Year Results |
| Friday 3 November | |
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| Monday 6 November | |
| Kingspan Group PLC | Trading Statement |
| Kosmos Energy Ltd | Q3 Results |
| Ryanair Holdings PLC | Half Year Results |
| Tuesday 7 November | |
| Associated British Foods PLC | Full Year Results |
| Beazley PLC | Q3 Results |
| Direct Line Insurance Group PLC | Trading Statement |
| dotdigital Group PLC | Full Year Results |
| IWG PLC | Q3 Results |
| Persimmon PLC | Trading Statement |
| RS Group PLC | Half Year Results |
| Vaalco Energy Inc | Q3 Results |
| Watches of Switzerland Group PLC | Trading Statement |
| Wednesday 8 November | |
| Conduit Holdings Ltd | Q3 Results |
| ITV PLC | Trading Statement |
| JD Wetherspoon PLC | Q1 Results |
| Marks & Spencer Group PLC | Half Year Results |
| MaxCyte Inc | Q3 Results |
| Secure Trust Bank PLC | Trading Statement |
| Smiths News PLC | Full Year Results |
| Time Out Group PLC | Full Year Results |
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