Forte's adopted strategy follows the fashion

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The Independent Online
For a company that claims to have been thinking seriously of a radical breakup for some months, Forte is remarkably thin on detail about the de-merger of its restaurants chain and other disposals. It seems doubtful the group would ever voluntarily have ceded empire in this way had it not been for Granada's hostile pounds 3.2bn takeover bid. Disposal of the Savoy stake, which by Sir Rocco Forte's own admission is not going to be easy, is a reversal of what Forte has been striving for over many years. While it is true that this particular crusade was a strategy inherited from his father, Lord Forte, it seems hard to believe Sir Rocco would have calling off the 13-year siege without the Granada rocket.

But let's be charitable and assume this is not the panic reaction it appears. Is this the right way forward - and is it enough to see off the Manchester invaders? Little Chef, Happy Eater and Welcome Break would together make an excellent standalone company, but they would probably be worth more in a series of trade sales. Granada itself might be in the queue if it were not bidding for the whole shebang. Indeed, as Granada is quick to point out, the whole concept of this demerger is flawed.

Breaking up is the fashionable thing these days. There are plenty of investment bankers making a good living out of unbundling the deals they set up in the 1980s and before. Fine, when it involves tractors and biscuits, but hotels and catering? Surely these are one and the same business? The demerger strategy might have been a little more believable had it been the up-market hotels that were being groomed for a separate quote.

To demerge the Little Chefs from the Travelodges, many of which are on the same sites, seems commercially a much more contentious approach. Furthermore, it goes against the play Forte itself made of the expansion of Travelodge three years ago.

No, though this might be a step in the right direction, what we know of these plans so far is not going to do the trick. The bid is far from over yet and it would be wrong to think of this as Sir Rocco's last throw of the dice. Forte's defence document - expected to concentrate on trying to reverse the perception that Sir Rocco has been a failure as a chief executive - has yet to be published and it can be reasonably assumed it will add more twists to the tale. A full revaluation of property assets and a profits forecast is even further down the line. Nonetheless, Forte still has an uphill struggle judging by soundings taken among its big shareholders.