Granada confronts spectre of defeat

GRANADA was this weekend seriously considering for the first time whether to drop its hostile bid for rival leisure group Forte, as it became clear that it will have to raise its pounds 3.2bn offer substantially to ensure victory. Under takeover rules, Granada has until Tuesday to make up its mind and the board will meet to take a final decision tomorrow.

The growing prospect of Granada throwing in the towel at the eleventh hour would represent one of the most dramatic turnarounds in corporate takeover history.

Most observers felt Granada had landed a knockout blow last month when its surprise bid caught Forte's executive chairman, Sir Rocco Forte, off guard on a Yorkshire grouse moor.

The consensus view in the City is that Granada will still probably lift its bid on Tuesday, but it has now become a much closer call. The Granada camp insists that it will not overpay for Forte.

Granada's chief executive, Gerry Robinson, was thought to be confident until last week that he would only have to tweak his 322p-per-share offer to seal Forte's fate.

But a robust defence mounted by Forte - involving the conditional sale of its Little Chef and Happy Eater roadside restaurants to Whitbread for pounds 1bn, an pounds 800m share buy-back, and the promise of a 20 per cent increase in dividends over the next three years - appears to have turned the tables on Granada.

By Friday, Granada was already on the back foot, ruling out any plans to fund a much higher offer for Forte by selling its 11 per cent stake in BSkyB, the satellite television broadcaster, which is worth about pounds 700m.

Spirits in the Granada camp were clearly sinking as they considered all the options during frantic last-minute talks.

Discussions centered on attempts to woo the Council of Forte, the body that safeguards Forte trust shares and has a majority of the voting rights, even though it has only a fraction of the ordinary shares.

Granada is conducting the talks through Lazards, its financial adviser, while the council is being advised by Hambros.

Agreement with the council would be essential before Granada could raise its offer to Forte's ordinary shareholders.

Granada is trying to reach a deal that would either put a price on the trust's shares or secure the council's neutrality. However, time is very short. "Granada wants a decision before the weekend is out," said a source close to the talks.

It was also suggested that failure to secure the council's agreement would provide Mr Robinson with a convenient fig-leaf to hide his embarrassment should he have to walk away from Forte.

That possibility loomed larger this weekend as analysts agreed that the current offer of 322p in cash and 328p in shares and cash had no chance of succeeding.

Several leading brokers on Friday published research notes giving Forte a break-up value of at least 380p.

"The continued streamlining of Forte and the progressive recovery of the domestic and international hotel markets together with the buyback suggest that the shares could reach 400p in 1996," wrote Julie Farrar of the Edinburgh-based investment house Sutherland & Partners.

The highly rated leisure team at Kleinwort Benson went further, saying Granada would not only have to raise its final offer close to the estimate 380p break-up value, but also provide "a more rational, detailed and credible set of plans for the whole of Forte if it is to prize investors away from the benefits" of the new-look company.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA celebration of British elections
Arts and Entertainment
Billie Piper as Brona in Penny Dreadful
tvReview: It’s business as usual in Victorian London. Let’s hope that changes as we get further into the new series spoiler alert
Life and Style
A nurse tends to a recovering patient on a general ward at The Queen Elizabeth Hospital in Birmingham
health
News
Fans take a selfie with Ed Miliband in Kempston, near Bedford, on Tuesday
election 2015
Arts and Entertainment
No Offence
tvReview: No Offence has characters who are larger than life and yet somehow completely true to life at the same time spoiler alert
News
Chuck Norris pictured in 1996
people
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Editor-in-chief - Financial Services - City, London

£60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Guru Careers: Project Manager / Business Analyst

£40-50k + Benefits.: Guru Careers: A Project Manager / Business Analyst is nee...

SThree: Trainee Recruitment Consultant - Swiss Banking and Finance

£20000 - £25000 per annum + Uncapped commission: SThree: Can you speak German,...

Day In a Page

General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

Miliband's unlikely journey from hapless geek to heart-throb

He was meant to be Labour's biggest handicap - but has become almost an asset
General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

On the margins

From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

'This is the battle of young Egypt for the future of our country'

Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

Why patients must rely less on doctors

Improving our own health is the 'blockbuster drug of the century'
Sarah Lucas is the perfect artist to represent Britain at the Venice Biennale

Flesh in Venice

Sarah Lucas has filled the British pavilion at the Venice Biennale with slinky cats and casts of her female friends' private parts. It makes you proud to be a woman, says Karen Wright
11 best anti-ageing day creams

11 best anti-ageing day creams

Slow down the ageing process with one of these high-performance, hardworking anti-agers
Juventus 2 Real Madrid 1: Five things we learnt, including Iker Casillas is past it and Carlos Tevez remains effective

Juventus vs Real Madrid

Five things we learnt from the Italian's Champions League first leg win over the Spanish giants
Ashes 2015: Test series looks a lost cause for England... whoever takes over as ECB director of cricket

Ashes series looks a lost cause for England...

Whoever takes over as ECB director of cricket, says Stephen Brenkley
Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power