City & Business: Granada's final bid battle

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The Independent Online
THE BATTLE for London Weekend Television moves inexorably towards its final denouement. Now that the offer has been cleared by the Office of Fair Trading, Gerry Robinson, chief executive of Granada, must decide by the end of this week whether to increase what he already believes to be a very fully valued pounds 650m bid or face the possibility of defeat.

It's an extremely finely balanced decision. The consequences of failure would be disastrous. Granada has already spent pounds 18m fighting this bid; by the time the offer has been underwritten for cash a second time the cost will be nearer pounds 30m - a whopping loss even for a company of Granada's size. Worse, Granada would find itself sidelined as an ITV operator, a small player in an industry dominated by Michael Green's Carlton.

But raising the offer significantly might have equally dire consequences. As Mr Robinson is keenly aware, if he offers too much, it becomes counter-productive because his share price would react adversely, and with it the value of his bid.

At LWT, the chairman, Sir Christopher Bland, and his chief executive, Greg Dyke, believe they've got every chance of remaining independent. Few managements deserve such an outcome more, and it's a hard and ungrateful institutional shareholder that sells them out. But Sir Christopher shouldn't count on loyalty. His best course at this late stage would probably be to strike an agreed deal with Granada at a higher price. That's certainly what the City is hoping for.

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