Bottom Line: LWT for big boys

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The Independent Online
'WHAT sort of increase is this?' was LWT's rhetorical response to Granada's raised and final offer. To which the only reply must be: 'A jolly good one.' Shareholders now have to chose whether to stick with LWT, take Granada's paper offer, which values LWT at 750p or sell in the market at 737p.

Granada's decision to increase its cash alternative to 686p means there is little time left to decide. Until Friday, 25 February to be exact.

Sticking with LWT looks the least favourable option. ITV is now a big boys' game, and, on its own, LWT risks being at a disadvantage compared with much larger, better resourced and more powerful combines such as MAI/Anglia and Carlton/Central.

LWT's share price is also buoyed by the bid; yet despite a desperate search no alternative bidder or trade investor has ridden to the rescue. The likelihood must be that it would fall steeply if the bid were to fail.

The verdict in the City yesterday was that Granada had done enough to secure LWT. But taking Granada's shares has its own disadvantages. An investment in the conglomerate at this stage is a bet on Gerry Robinson's ability to continue the process he began just over two years ago of turning the company around.

He has started well. But Granada's dependence on the rental and, to a lesser extent, the catering businesses, is still a source of concern, while the price paid for LWT will be hard to justify. Shareholders should ask themselves whether Granada represents as exciting a prospect as, say, Reuters. If not, take the money and run, but first wait for the drama to draw to its close.