Forte to offer pounds 500m payout

FORTE is set to return around pounds 500m in a special payout to shareholders as the final plank of its defence against Granada's hostile pounds 3.2bn bid for the hotels and restaurants group.

With the acrimonious bid battle reaching its climax over the next fortnight, Granada is widely expected to lift its offer, but only by about 10 per cent. It has until 9 January to do so.

In its final defence document, due on Tuesday, Forte will also offer to distribute its stake in the luxury Savoy hotels chain directly to investors and lift the 1995 dividend by 10 per cent.

Yesterday it increased the pressure on Granada to lift its 322p-per-share cash offer by announcing a pounds 355m revaluation of its hotels business to pounds 3.35bn.

Forte's chairman, Sir Rocco Forte, said: "This valuation demonstrates the underlying value and quality of our asset portfolio. After an extended downturn in the property market, it is encouraging to see the beginning of a long-term upswing for the hotel industry." The value did not include "fanciful prices special buyers might pay for trophy hotels," a spokesman added. Forte's upmarket assets include London's Grosvenor House, for which the Sultan of Brunei is understood to have offered pounds 300m earlier this year.

But Granada immediately riposted that property revaluations needed to be taken with a pinch of salt. Gerry Robinson, chief executive, said: "This looks like a bit of an own goal by Forte, showing up, as it does, its terrible return on assets."

The Forte move is part of a rolling programme of attrition over the past week, which saw the provisional pounds 1.05bn sale of its motorway service stations and Happy Eater and Little Chef roadside restaurants to Whitbread, and Granada labelled as an opportunistic and unfocused conglomerate.

On Friday, Forte also forecast pre-tax profits of at least pounds 190m for the year to end January, up from pounds 185m estimated earlier this month following a rise in Christmas hotel occupancy rates and forward bookings.

City analysts expect Forte to announce a special dividend, or share buyback, worth 25-50p a share,. or up to pounds 475m - around half the net cash from disposals.

Planned sales so far, which also include the Lillywhites sports chain and the US Travelodge hotels, will almost wipe out Forte's pounds 1.5bn of net debt at the half year stage.

Forte is thought to be prepared to shoulder its remaining hotel interests with debt of up to pounds 1bn, a ratio of up to 40 per cent of assets, giving scope for a higher payout even after continued investment in hotel upgrades is taken into account.

Granada this week is expected to put the spotlight firmly on the cost of the special dividend and the impact on Forte's gearing. Mr Robinson said, "To pay out 50p [in a special dividend] would cost them half a billion pounds. That leaves some very high debt in the hotels company - at least pounds 700m."

Granada is also expected to try to scotch the idea, promoted in the Forte camp, that a successful bid would turn it into that unfashionable species, the conglomerate. Mr Robinson said: "We are much more narrowly defined than some considered to be pure leisure companies."

He dismissed the defence put out by Forte and its potential deal with Whitbread as "a whole lot of noise", and stressed that the Forte share price had never exceeded the bid price by more than a few pence.

Granada is expected to publish another document soon after Forte's defence document, again spelling out the difference in share price performance of the two companies: pounds 100 invested in Granada five years ago, and the dividends reinvested, would be worth pounds 550 today; the same sum in Forte would be worth pounds 132.

The closing date for the bid is 23 January.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Executive / Foreign Exchange Dealer - OTE £40,000+

£16000 - £40000 per annum: Recruitment Genius: A Foreign Exchange Dealer is re...

SThree: Experienced Recruitment Consultant

£20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

Day In a Page

Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

Cameron lowered the flag for the dead king of Saudi Arabia...

But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Humanity must be at the heart of politics, says Jeremy Corbyn
Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

Joe Biden's 'tease tour'

Could the US Vice-President be testing the water for a presidential run?
Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

Britain's 24-hour culture

With the 'leisured society' a distant dream we're working longer and less regular hours than ever
Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

The addictive nature of Diplomacy

Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
Lady Chatterley's Lover: Racy underwear for fans of DH Lawrence's equally racy tome

Fashion: Ooh, Lady Chatterley!

Take inspiration from DH Lawrence's racy tome with equally racy underwear
8 best children's clocks

Tick-tock: 8 best children's clocks

Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
Charlie Austin: Queens Park Rangers striker says ‘If the move is not right, I’m not going’

Charlie Austin: ‘If the move is not right, I’m not going’

After hitting 18 goals in the Premier League last season, the QPR striker was the great non-deal of transfer deadline day. But he says he'd preferred another shot at promotion
Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Who is Oliver Bonas and how has he captured middle-class hearts?

Who is Oliver Bonas?

It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

60 years of Scalextric

Model cars are now stuffed with as much tech as real ones