Family row threatens sale of the Savoy

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The Independent Online
THE SALE of the Savoy Group of hotels, which could fetch more than pounds 500m, may be threatened by a split in the Wontner family, which hold a substantial stake in group. Family resistance to the deal is likely to extend one of the longest-ever running corporate sagas.

Some of the family members, including Lady Wontner, are understood to be lukewarm about the prospect of the Savoy falling into American hands, according to sources close to the talks. Others are pushing for a sale but are unhappy about the way Granada, the leisure and media giant which has a large stake in the group, has proposed to divide the proceeds between the holders of the Savoy's B-shares, which carry full voting rights, and the A-shares, which have fewer voting rights.

Advisers working for Granada and the Wontners are believed to have met in an effort to thrash out a deal. However, intense negotiations are likely to rumble on for weeks, if not months, and continued opposition from some members of the family could even scupper the sale completely.

The Wontner family have controlled the group for more than 40 years, fighting off numerous takeover attempts, and it has taken Granada two years to get this close to a deal. But there are doubts it can muster enough support for a sale.

"We have got this far so many times before and then seen a deal crumble. There is always a chance it could happen again," said one source close to the talks.

Blackstone, the US investment bank, has emerged as front runner to buy the hotel chain after indicating it could offer pounds 520m for the group. However, there is likely to be a fierce bidding war for the group's trophy hotel assets, Claridge's, The Connaught and The Berkeley. Starwood Hotels & Resorts, Meditrust and Patriot American Hospitality have also submitted informal bids for the Savoy.

However, no firm offers have been received and the bidding process could be delayed until the group's shareholders can reach a settlement on the share structure.

Granada has made no secret of the fact it wants to sell the 68 per cent in the Savoy it inherited when it acquired Forte. A deal has been bogged down by the Savoy's complicated share structure which has lead to a heated debate between the group and family shareholders.

Granada believes that the groups B-shares should be valued at only two- times the A-shares, at odds with the family which believes they should be priced at up to seven-times the A-shares. Some members are even calling for the B-shares to be priced at 10-times the As. The negotiations have been clouded by the fact that the Wontner family may have lost control of the group, holding less than 50 per cent of the shares between them.

NM Rothschild, the bank representing family trusts, and Deutsche Morgan Grenfell, who represent charitable holdings, are waiting to hear the terms of any firm offer for the group before finalising any terms.

The Savoy board remains keen to broker a sale. The group has been rejuvenated by managing director Ramon Pajares, who wants to see the group's ownership resolved so he can concentrate on taking The Savoy name overseas. He is expected to unveil a strong set of annual results today.

The Savoy A-shares jumped another 137.5p to an all-time high of 1887.5p as bid speculation intensified.