Forte restaurant sale could thwart bid
Tuesday 26 December 1995
The sale, which insiders at Forte yesterday confirmed could come within two weeks, has emerged as the key plank in Forte's controversial defence against Granada's unwanted pounds 3.3bn bid.
A deal with Whitbread could complicate the Forte bid situation dramatically. Any sale would have to be put to shareholders, and that might not be possible before the crucial day 39 of the bid period, after which fresh financial details cannot be published. It is also possible that Granada may ask the Takeover Panel to intervene.
Granada had no comment last night. A spokesman suggested that "this might not be the best time to be selling assets, where your arm is twisted behind your back". He said, however, that the company would wait for further details on the proposed sale.
Granada had planned to keep the restaurant business, largely made up of the Happy Eater and Little Chef chains. Forte operates 26 roadside service sites, branded as Welcome Break, and a network of 55 sites in France, under the Cote France brand.
If a deal with Whitbread is reached, Granada will have to hope Forte shareholders withhold their authorisation, and choose instead to accept the television and leisure company's hostile bid. But for that to happen, Granada is likely to have to up its offer, perhaps by as much as pounds 600m.
Forte's radical defence, which would leave it with its hotel operations, had been given a mixed reaction in the City. But analysts concede the demerger plan is clever, as it could remove from the equation the very assets - namely the restaurants - that attracted Granada's attention in the first place.
A sale of the restaurant operations would substantially reduce Forte's debts. The company is also working on disposing of its chain of White Hart hotels, and last week confirmed the sale of its US Travelodge hotels for pounds 114m.
Granada's offer has been justified by its chief executive, Gerry Robinson, on the grounds that the Forte assets had been badly managed, and that Granada could release shareholder value. He and his executives have promised to improve Forte's profits by pounds 100m a year.
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