Billions at stake as Forte steps up takeover war

The embattled hotels and restaurant group Forte yesterday pitched the City's highest profile takeover battle into frenzied confusion, unveiling a pounds 1bn agreed sale of its Happy Eater and Little Chef restaurant chains to brewing and catering giant Whitbread.

The move, part of an increasingly desperate defence against an unwanted pounds 3.2bn bid from Granada, the television and leisure company, led City analysts to admit that the takeover battle was now too close to call.

If the restaurant deal goes through, Whitbread, already the owners of Pizza Hut, TGI Friday's and Beefeater, will become the UK's largest restaurant operator - bigger than market leader McDonald's - with Forte's 430 Little Chef and Happy Eater outlets.

The agreement is the latest salvo in the highly hostile and personal battle between Forte and Granada, the maker of the long-running television soap opera Coronation Street, which is run by the cheerful but ruthless Gerry Robinson, one of the City's most respected managers.

Granada's pounds 3.2bn bid has galvanised management at Forte, which has sold off companies worth pounds 160m since the offer was launched, in a desperate attempt to ward off Granada's unwanted attentions.

The deal with Whitbread, which is conditional on the Granada bid's lapsing, has raised the stakes to fever pitch.

Whitbread's late entry into the saga means that three of the UK's most influential companies, which between them own pubs, luxury hotels, restaurants, two ITV television companies and two huge retail chains, are now battling centre-stage in what has become one of the most bitter struggles in recent memory.

Granada, predictably, criticised the proposed sale yesterday. Mr Robinson, Granada's Irish-born chief executive, said from Donegal: "This is certainly a brilliant deal from Whitbread's point of view, but it isn't in the best interests of [Forte] shareholders." He claimed that Granada's management could double the profits of Forte's restaurant business within two years.

Word of Forte's secret negotiations with Whitbread emerged over the Christmas holiday weekend, as Mr Robinson was spending time at his family home in Ireland. Forte chairman Sir Rocco Forte, who was forced to rush back to London from a shoot in Yorkshire last month when Granada unveiled its initial offer relished turning the tables on his absent adversary yesterday.

"I suspect that Mr Robinson didn't have time to finish his Christmas pudding," he said.

Mr Robinson responded: "I had plenty of time to finish," and added that the deal did not worry him. "Shareholders must now make a choice as to whether they prefer this offer or our more generous offer for the whole of Forte."

If Sir Rocco, the heir to the Forte family's hotels and catering business, manages to pull off the Whitbread deal, he will be left with a company only two-thirds its original size but with most of its hotels business intact and with debt virtually wiped out. Sir Rocco said yesterday: "The whole point of our strategy is to get down to being a focused hotel group." Forte owns the luxury Grosvenor House in London, as well as five-star properties in Europe.

Granada accuses Forte of engaging in a firesale dumping of assets, and says the management only began to act effectively following the unveiling of Granada's hostile bid last month.

Sir Rocco disputes this, claiming that the group had already embarked on a restructuring, and that Granada was attempting to get Forte on the cheap, just before the hotel cycle swings upward again.

The dramatic battle is expected to continue into next week, as Granada considers whether to raise its offer and Forte continues to seek buyers for non-core businesses. Forte is also expected to promise a special dividend for shareholders if they agree to dismiss the Granada bid and stick with current management.

Unless it decides to throw in the towel - unlikely, say insiders - Granada will now have to come back with a sweetener, which analysts expect will have to top pounds 600m, to take the offer to about pounds 3.8bn.

Pressure on Granada, page 16

Comment, page 17

The Whitbread empire

Whitbread's outlets if the Forte deal goes ahead:

Public houses: 2,600

Thresher off-licences: 1,603

Pizza Hut: 239 (plus 100 takeaways)

Beefeater pubs: 270

TGI Friday restaurants: 18

Brewer's Fayre pub restaurants: 230 (plus 50 opening this financial year)

Costa Coffee cafes: 41

Little Chef and Happy Eater restaurants: 430

Travelodge budget hotels: 127

Welcome Break motorway services: 26

Cote France motorway services: 55

Start your day with The Independent, sign up for daily news emails
News
people
News
A survey carried out by Sainsbury's Finance found 20% of new university students have never washed their own clothes, while 14% cannot even boil an egg
science...and the results are not as pointless as that sounds
News
politicsIs David Cameron trying to prove he's down with the kids?
News
Businessman at desk circa 1950s
news
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Sauce Recruitment: Partnership Sales Executive - TV

competitive + benefits: Sauce Recruitment: An award-winning global multi-media...

Sauce Recruitment: Account Director

£26017.21 - £32521.19 per annum + OTE $90,000: Sauce Recruitment: My client is...

Recruitment Genius: Linux Systems Administrator

Negotiable: Recruitment Genius: This leading provider of UK Magento hosting so...

Recruitment Genius: Sales Development Manager - North Kent - OTE £19K

£16000 - £19000 per annum: Recruitment Genius: A unique opportunity has arisen...

Day In a Page

Woman who was sent to three Nazi death camps describes how she escaped the gas chamber

Auschwitz liberation 70th anniversary

Woman sent to three Nazi death camps describes surviving gas chamber
DSK, Dodo the Pimp, and the Carlton Hotel

The inside track on France's trial of the year

Dominique Strauss-Kahn, Dodo the Pimp, and the Carlton Hotel:
As provocative now as they ever were

Sarah Kane season

Why her plays are as provocative now as when they were written
Murder of Japanese hostage has grim echoes of a killing in Iraq 11 years ago

Murder of Japanese hostage has grim echoes of another killing

Japanese mood was against what was seen as irresponsible trips to a vicious war zone
Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

Celebrities call on David Cameron to take more Syrian refugees

One young mother tells of torture by Assad regime
The enemy within: People who hear voices in their heads are being encouraged to talk back – with promising results

The enemy within

People who hear voices in their heads are being encouraged to talk back
'In Auschwitz you got used to anything'

'In Auschwitz you got used to anything'

Survivors of the Nazi concentration camp remember its horror, 70 years on
Autumn/winter menswear 2015: The uniforms that make up modern life come to the fore

Autumn/winter menswear 2015

The uniforms that make up modern life come to the fore
'I'm gay, and plan to fight military homophobia'

'I'm gay, and plan to fight military homophobia'

Army general planning to come out
Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

What the six wise men told Tony Blair

Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

25 years of The Independent on Sunday

The stories, the writers and the changes over the last quarter of a century
Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

Homeless Veterans appeal

As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

Smash hit go under the hammer

It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

The geeks who rocked the world

A new documentary looks back at origins of the computer-games industry
Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

Belle & Sebastian is taking a new direction

Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea