Green offers $1.2bn for Arcadia

LONDON, England -- Entrepreneur Philip Green increased his offer to buy British retailer Arcadia Group after the clothes retailer rejected an earlier bid.

Green, through his family holding company Taveta Investments, in his "final offer" to shareholders is willing to pay 408-pence a share, or £770 million ($1.2 billion). Arcadia, owner of the Top Shop and Burton chains, had said an earlier bid at 365 pence a share, or £690 million, was too low.

Analysts had said an offer of more than 400 pence a share could win over shareholders and management. Arcadia's third-biggest shareholder, Standard Life Investment Management, which holds an 8.2 percent stake, rejected the earlier offer.

Arcadia's stock, which has slipped from an April high of 400 pence on concern British consumer spending is slowing, soared 12.7 percent to 387.62 pence in early London trading on Thursday.

Billionaire Green bought Arcadia's rival Bhs for £250 million two years ago and turned around its fortunes to dramatically increase the value of the retailer and his personal wealth.

Earlier this year he held merger talks with toys, sweets and music chain Woolworths Group, but discussions collapsed with both sides blaming each other and with indications Green could make a hostile bid.

Taveta said in a statement the cash offer was being made to all Arcadia investors, except the company's main shareholder Icelandic retailer Baugur, which holds about 20 percent.

Its latest offer is dependent on Arcadia's management recommending it to shareholders and a deal being reached with Baugur, involving the purchase of Baugur's stake and the sale of some Arcadia assets to the Icelandic firm. These could include youth fashion brands Topshop, Top Man and Miss Selfridge.

Green is expected to keep the Dorothy Perkins, Burton and Wallis brands.

Baugur, which supports Green's latest offer, made a bid to buy the much larger Arcadia last year, with an offer of 280-300 pence per share, valuing the British company at up to £568 million. It said talks ended in February, although it retained 20 percent of Arcadia's shares.

Before his purchase of Bhs, Green had considered an audacious attempt to buy Marks and Spencer, the biggest name on the UK high street, for £11 million, when M&S was struggling to revive its fortunes.

Arcadia said on Thursday it was considering it response to the latest offer.