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US equity firm Apollo examines potential M&S buyout

The news comes after M&S returned to profitability for the first half of the year ending 2 October 2021

US private equity firm Apollo has reportedly been considering a buyout of Marks and Spencer, after initially considering it to be undervalued. 

According to the Sunday Times, it said city sources believe that Apollo considered M&S to be a “bargain” and that the impact of Covid-19 had unfairly “weighed down” its shares. 

The paper said that Apollo also thought that the retailer’s 50% stake in Ocado’s retail business was also undervalued. M&S acquired the stake back in 2019 in a £750m deal. 

The reports also suggested that it is unclear whether Apollo’s interest has been dampened following M&S recent stock market rise which has seen its rise 24% to see the retailer just shy of re-entering the FTSE 100 and valued at £4.7bn. 

The news comes after M&S returned to profitability for the first half of the year ending 2 October 2021.

Last month, the group revealed it saw pre-tax profits rise to £187.3m compared with losses of £87.6m the previous year.

Statutory revenues also increased to £5.1bn from £4.09bn in 2020 and were boosted by the bounce back in spending and the benefits of the reshaping of M&S Food which saw a 10.4% increase in sales.

Meanwhile, the clothing and home business delivered 17.3% growth in full price sales which helped drive a healthy improvement in operating profit before adjusting items.

The group stated it expects profit before tax and adjusting items for the year to be ahead of expectations and to reach £500m.

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