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.Reuse content