Marks & Spencer was today awaiting the next move by retail tycoon Philip Green after a second takeover proposal was knocked back by the high street giant.

Mr Green said he was willing to pay at least £8.4 billion in cash for the retailer, but saw the possible offer rejected within hours by the M&S board yesterday.

M&S chief executive Stuart Rose said the offer of at least 370p per share significantly undervalued the company and it would not be put to shareholders.

Analysts said the scene was now set for Mr Green to raise the stakes by bypassing the M&S board and taking his offer directly to shareholders.

Richard Ratner, of stockbrokers Seymour Pierce, said the entrepreneur had enough financial support to raise his bid for a third time.

But he added: "It's obvious that he'll have to go hostile and he'll only do that if he thinks he has a chance of getting it."

Bhs and Arcadia owner Mr Green revealed an extra £1.4 billion in financing for his proposal, including another £50 million from his family fortune.

Shareholders would be offered the chance to swap all their shares for cash but there was also an option to take a partial stake in his bid vehicle, Revival Acquisitions.

This change comes after investors gave a lukewarm reaction to his initial offer of £7 billion cash and a 25% stake in Revival, which analysts said was difficult to value.

M&S has come out fighting since Mr Green first expressed an interest in making an offer.

Mr Rose was recruited to replace Roger Holmes as chief executive after M&S admitted its sales recovery had faltered.

One of his first actions was to launch a review of the business and Mr Rose has pledged to set out his plans to improve the company's performance on July 12.

Thursday June 17, 2004