and JOHN SHEPHERD
The besieged Forte hotels group was believed last night to be considering radical measures to ward off Granada's unwanted pounds 3.3bn bid. The options include a firesale of key assets, an acquisition overseas and the appointment of a chief executive to work alongside Sir Rocco Forte, who holds that post in addition to being chairman.
Meanwhile, Granada said its offer document could be published as early as this weekend.
City sources said the hostile shares and cash offer, worth 329p a share at last night's closing price for Granada of 653p, would have to be raised to secure outright victory. The break-up value of Forte was reckoned to be close to 400p. Forte shares rose 3.5p to close at 351p.
Analysts said talk of a radical defence from Forte was unlikely to save the group from takeover but could extract a higher price. NatWest Securities wrote in a research note: "It is our view that there will eventually be a marginal sweetening of the deal."
The emergence of a rival bid remained unlikely, despite market rumours. Suntory, the Japanese drinks giant, formally denied that it had made, or would make, plans to bid.
Talk that Bass might be a bidder was also discounted. However, there was a separate rumour yesterday that Bass, owner of the Holiday Inn chain and Coral betting shops, may be considering a takeover bid for Ladbroke, owner of the Hilton chain outside the US and the market-leading Ladbroke racing group. Ladbroke has a market capitalisation of pounds 1.6bn. Bass declined to comment.
It is believed that Forte may be looking for buyers for a few of its so-called "trophy" hotels, as well as its extensive restaurant holdings, including the Little Chef and Happy Eater chains. The company's motorway service sites might also be earmarked for disposal. It was believed the group could raise as much as pounds 1bn from the sales, enough nearly to wipe out debt.
An announcement to expand the Meridien chain was also thought possible. Granada had promised that it would use Meridien as a prime vehicle for growth if its bid was successful.
Merchant banks in the City were said to be feverishly drawing up lists of potentially interested parties, both in the UK and overseas. Likely buyers of Forte assets, whether sold by the predator or the target, include wealthy individuals such as the Sultan of Brunei and Prince Waleed and companies such as Sheraton and Marriot.
The Granada camp was dismissive of any plans by Forte to restructure: "We think that they are panicking. Just talking about sales doesn't address the essential issues. The important thing is what Granada brings - getting costs out, margins up and generating value for shareholders."
The current Forte management has already launched a disposals programme - for example, putting the US Travelodge chain up for sale. It is also believed to be ready to sell the White Hart chain of hotels, on the books at pounds 120m.
Granada is thought to have already identified buyers for the pounds 500m worth of assets it intends to sell, including Forte's motorway service sites, some hotels and stakes in the Savoy hotels group and Alpha, the airline caterer. Whitbread is believed ready to buy the motorway sites if they become available.
Meanwile the Forte Council, which holds a 50 per cent "golden share," said last night it would meet next week to discuss the bid. It plans to speak to Forte and Granada before announcing how it will respond.