TROUBLED retailer Marks & Spencer began buying back more than a quarter of its shares at 362p each yesterday in the largest tender offer in UK corporate history.

M&S said the scheme, which the company hopes will prevent any further takeover bids, will see £2.3bn returned to shareholders as a reward for their loyalty during the fight against a potential £9.1bn takeover bid from retail tycoon Philip Green.

The offer will see 27.9 per cent of M&S shares cancelled, leaving about 1.65 billion in circulation.

An M&S spokesman said it was too early to say how the buyback would affect the balance of power between institutions and private shareholders.

That balance is important because Mr Green blamed opposition from private investors, who held 20 per cent of M&S shares before the tender offer, for blocking his takeover attempt.

The offer price for the shares is higher than the closing share value of 357p on Friday, but short of the 400p Mr Green was willing to pay for each share to gain control.

M&S placed the buyback at the centre of its defence against Mr Green's bid. He is now barred from bidding for the retailer until February,

Funds for the buyback, which was approved by shareholders at a meeting in London on Friday, were raised from the sale of financial services operation M&S Money to HSBC.