Forte rubbishes Granada bid 'farce'
Sir Rocco claims Robinson 'does not believe in style or service'
Sunday 26 November 1995
He said Mr Robinson had no concept of quality, service or style: "Robinson doesn't have one quality business in his portfolio. He doesn't talk about style and service - he doesn't believe in them - which is why he's such an inappropriate person to run this business."
Sir Rocco's outspoken re-marks contrast sharply with the carefully crafted criticisms of Mr Robinson. Although he has not directly attacked Sir Rocco, the Granada boss's charges that Forte has been poorly managed clearly hit home. In the offer document he chastised Forte for having a "misguided strategy", missing its performance targets, and "failing to exploit good brands". Forte, shareholders were told, "has lost credibility and forfeited the right to count on your support". The subtle portrayal of Sir Rocco as a toff, ignoring his humble origins as the grandson of an Italian immigrant, also must have hurt.
Mr Robinson said he was astonished by Sir Rocco's criticisms. "It's just wrong," he said of the corporate raider charge. "I've never been at a business for less than eight or nine years."
Sir Rocco defended his own performance, pointing in particular to recent jumps in pre-tax profit and a youthful new management team. Many of the ideas put forward by Mr Robinson he claims as his own, such as the flotation of the Alpha Airports Group.
The figures in the offer document, however, show that compared with the FTA All-Share Index, Forte's stock has been falling, or at best static, for five years while Granada has soared. Mr Robinson cites the return on a pounds 100 investment made in late 1990. At Forte it would, by now, have gained pounds 30. At Granada, pounds 444. The defence against such comparisons is that the baseline is just prior to the recession and Gulf War crisis that devastated the leisure industry.
Such vitriol early in the bid battle seems likely to signal a dirty, no-holds-barred scrap. The first battlefield, being approached from both sides next week, is the Council of Forte, the trust that holds a controlling block of votes. Mr Robinson wants them to remain neutral. Sir Rocco will not say what he will ask of them.
Whichever way the council goes, the Takeover Panel will have the final say. During the last bid for Forte, in 1971, it decided that the council's heavily weighted trust shares would not count towards acceptance. But in that case both the Council and Forte's board agreed.
If the council's trust shares are discounted, remaining shareholders suddenly become significant. The largest is Mercury Asset Management with 12.5 per cent. It also owns almost 15 per cent of Granada. The reasons it built up the two stakes are quite different, and not encouraging for Sir Rocco. Forte was bought because MAM thought the property portfolio attractively priced. It invested in Granada because it believed in Mr Robinson. Faced with a similar situation during the Granada bid for LWT two years ago, it sold.
If successful, Granada says it will rejuvenate Forte's roadside restaurants, push the mid-market Meridien hotel brand and rationalise budget inns under the Posthouse and Travelodge names. It also plans to sell Lillywhites, the remaining Alpha stake, the Welcome Break motorway service stations and its stake in the Savoy Group. Among possible buyers for the service stations is the drinks group Whitbread.
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