Marks & Spencer Advances as Pension Deal Boosts Bid Speculation

Nov. 28 (Bloomberg) -- Marks & Spencer Group Plc, the U.K.’s biggest clothing retailer, rose the most in almost three months in London trading as a lower pension deficit and reduced funding costs fueled renewed takeover speculation.

The shares gained as much as 3.7 percent to 392.8 pence, the steepest intraday advance since Sept. 10.

The pension shortfall was 290 million pounds ($464 million) as of March 31, down from 1.3 billion pounds in 2009, the London-based company said today, also announcing that it has struck an agreement with trustees for reduced contributions.

The deficit has been cited by analysts such as Panmure Gordon’s Jean Roche as being among possible deterrents to potential bidders for the retailer, which in 2004 fended off a 9.1 billion-pound offer from billionaire Philip Green.

“From a takeover perspective, the news of a much reduced Marks & Spencer pension fund deficit and lower funding costs could be said to take away one of the poison pills,” Nick Bubb, an independent retailing analyst, said by e-mail.

Marks & Spencer was up 3 percent at 390 pence as of 10:20 a.m., giving the retailer a market value of 6.3 billion pounds.

The 10-year funding deal reached with the pension trustees includes annual cash contributions of 28 million pounds through the 2017 financial year, down from the previously agreed 60 million pounds a year through 2018, the retailer said.

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