Forte steps up war of words in takeover saga
Friday 19 January 1996
Forte yesterday predicted that Granada could lose up to one-third of the management fees from Meridien, the hotels group, if its pounds 3.9bn hostile bid goes through.
The luxury hotels and restaurants company, which is in the final desperate stages of defending its independence, said the loss of contracts could jeopardise a sale of the Meridien chain, which Granada has promised as part of its asset disposal programme. Nine owners could terminate their management contracts immediately, Forte said, and warned that a domino effect could induce other owners to follow suit.
Patrick Copeland, hotels director at Forte, said that in the light of the question marks over the Meridien contracts, "Granada's ability to realise pounds 2.1bn proceeds from its planned asset sales look ill-founded and unrealistic".
Granada has said it would raise pounds 500m from the sale of Forte's 68 per cent stake in Savoy, the motorway service operations and a stake in Alpha, the catering group. Another pounds 1.6bn would come from hotel sales, including the Meridien chain. Yesterday, Granada dismissed Forte's warning on Meridien - and warned that the latter's promised international expansion was unlikely to be a success, in the light of Forte's "past track record in this area".
Meanwhile, it emerged last night that a provisional deal by Forte to sell its restaurants and budget hotels business to Whitbread has attracted the interest of competition authorities. According to informed sources, Whitbread is prepared to sell four Travelodge hotels close to sites in its existing portfolio, in order to avoid a reference.
Sir Rocco Forte yesterday continued his discussions with small shareholders, who are believed to be more likely than institutions to vote against the hostile bid.
Analysts continued to predict a victory for Granada, although some said the outcome remained close. Mercury Asset Management confirmed yesterday it had sold an additional 5 million shares to Granada in response to the TV and leisure company's bid for a 9.9 per cent stake. MAM is expected to tender its remaining shares to Granada by the time the bid closes on Tuesday.
Granada closed 3p higher at 696p, while Forte was 4p stronger at 381.5p.
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