Granada details pounds 100m savings

Forte battle: Bidder prepares to be specific about its promises as share registers reveal cross-holdings

MATHEW HORSMAN

and JOHN SHEPHERD

Granada is poised to bury Forte's management in an avalanche of detailed promises on how it intends to run the hotels and restaurant company, as part of a last-ditch effort to win its pounds 3.3bn hostile bid.

The breakdown of Granada's promised pounds 100m in savings shows how Granada intends to achieve half that amount through rebranding, higher room rates and reworked restaurant menus. The rest will come from head-office savings and centralised purchasing.

The figures, to be released by Granada next week, are likely to be accompanied by a sweetened offer - although analysts differ on how much higher Granada will go. Charles Allen, Granada's chief operating officer, declined to comment on the breakdown, saying it would be unveiled next Monday or Tuesday.

The fresh details emerged as the powerful Council of Forte, which owns less than 1 per cent of Forte's shares but controls 50 per cent of the votes, met with advisers from both sides yesterday. A spokesman for the council said: "No conclusions have been reached and we are continuing discussions with both parties."

Sir Rocco Forte with Keith Hamill, finance director, and Richard Power, public affairs director who was promoted to the main board on Tuesday, yesterday hosted a two-hour briefing for 50 leisure analysts from stockbroking firms and other leading City institutions.

Forte told analysts that occupancy levels in hotels in all of Forte's main brands - Exclusive, Meridien, Posthouse and Heritage - are high and in many instances are well above the market average.

To support its controversial claim of pounds 100m in annual savings, Granada has prepared a segment-by-segment analysis of Forte's main businesses, detailing precisely how much will be spent refurbishing the Little Chef and Happy Eater restaurants, which Forte has agreed to sell to Whitbread as part of its defence strategy.

Just under 100 Little Chef sites are earmarked for transformation into fast-food outlets, while another 17 will get immediate refurbishment. The company intends to spend about pounds 250,000 on each new fast-food outlet, and about pounds 50,000 on the remaining sites. Some of the 420 Little Chef and Happy Eaters could be sold off.

The restaurant business is also to get "re-engineered menus", with old- fashioned items dropped, new products introduced and more expensive, lower- margin ingredients removed. Granada expects to be able to improve margins by 3 percentage points through these measures. On the hotels front, the rebranding of the Posthouse and Crest properties into a single upper mid- market chain will allow higher room rates, Granada will argue.

Travelodge rates will also be raised by at least pounds 5 a night, increasing to about pounds 10 more a night for business travellers. Forte currently charges a flat pounds 34.50 at many of its budget hotels.

By effectively doing away with Forte's head office, and reducing the number of operating units from 12 to just three, it will argue that it can save at least pounds 24m a year, the amount by which Forte claims it can enhance profits under its own savings plan.

If the Granada bid succeeds, total food and beverage supplies would cost about pounds 320m a year, made up of pounds 180m for the Granada operations and pounds 150m for Forte (not counting the motorway services business that Granada intends to sell).

Granada will argue that it could achieve discounts of up to 10 per cent on its bulk purchases by dealing with fewer suppliers and limiting the independence of line managers to reach their own supply deals. The savings could reach as much as pounds 25m a year, Granada will claim.

There were heavy dealings in Forte and Granada shares yesterday. One dealer said Americans were buying shares in Granada, up 7.5p to 649.5p, in the belief that its bid will fail. Forte shares closed unchanged at 343p.

The Forte stakes

Top 10 shareholders

Institution % held

Mercury Asset Mgt 13.23

Gartmore 2.92

Prudential 2.86

Capital Group 2.76

Legal & General 2.29

Baring 2.29

Standard Life 2.28

BZWIM 1.92

Hermes 1.89

Robert Fleming 1.78

Total 34.22

Source: shareholder register

December 1995

News
people
Arts and Entertainment
Joel Edgerton, John Turturro and Christian Bale in Exodus: Gods and Kings
film Ridley Scott reveals truth behind casting decisions of Exodus
News
people
Sport
footballArsenal 2 Borussia Dortmund 0: And they can still top the group
PROMOTED VIDEO
Arts and Entertainment
An unseen image of Kurt Cobain at home featured in the film 'Kurt Cobain: Montage of Heck'
filmThe singers widow and former bandmates have approved project
News
Andy Murray with his girlfriend of nine years, Kim Sears who he has got engaged to
peopleWimbledon champion announces engagement to girlfriend Kim Sears
Arts and Entertainment
Jake Quickenden and Edwina Currie are joining the I'm A Celebrity...Get Me Out Of Here! camp
tv
Arts and Entertainment
George Mpanga has been shortlisted for the Critics’ Choice prize
music
News
Albert Camus (left) and Jean-Paul Sartre fell out in 1952 and did not speak again before Camus’s death
people
Arts and Entertainment
Roisin, James and Sanjay in the boardroom
tvReview: This week's failing project manager had to go
News
ebooksNow available in paperback
News
Ed Miliband visiting the Holocaust museum in Jerusalem. The Labour leader has spoken more openly of his heritage recently
newsAttacks on the Labour leader have coalesced around a sense that he is different, weird, a man apart. But are the barbs more sinister?
Arts and Entertainment
'Felfie' (2014) by Alison Jackson
photographyNew exhibition shows how female creatives are changing the way women are portrayed in advertising
News
i100
Life and Style
Fright night: the board game dates back to at least 1890
life
Environment
The vaquita is being killed by fishermen trying to catch the totoaba fish, which is prized in China
environmentJust 97 of the 'world's cutest' sea mammals remain
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

Langley James : IT Support; Helpdesk, VMware; Manchester, £18k

£16000 - £18000 per annum: Langley James : IT Support; Helpdesk, VMware; Manch...

h2 Recruit Ltd: Business Development Manager - HRO - £70k+ ote

£35000 - £450000 per annum + £3k car, £70k ote: h2 Recruit Ltd: Do you want to...

Citifocus Ltd: Newly Qualified Accountants - Risk Mgmt

£Attractive Package: Citifocus Ltd: Prestigious financial institution seeks to...

Citifocus Ltd: Operational Risk Analyst

£Negotiable: Citifocus Ltd: Experienced operational risk professional with ban...

Day In a Page

Cameron, Miliband and Clegg join forces for Homeless Veterans campaign

Cameron, Miliband and Clegg join forces for Homeless Veterans campaign

It's in all our interests to look after servicemen and women who fall on hard times, say party leaders
Millionaire Sol Campbell wades into wealthy backlash against Labour's mansion tax

Sol Campbell cries foul at Labour's mansion tax

The former England defender joins Myleene Klass, Griff Rhys Jones and Melvyn Bragg in criticising proposals
Nicolas Sarkozy returns: The ex-President is preparing to fight for the leadership of France's main opposition party – but will he win big enough?

Sarkozy returns

The ex-President is preparing to fight for the leadership of France's main opposition party – but will he win big enough?
Is the criticism of Ed Miliband a coded form of anti-Semitism?

Is the criticism of Miliband anti-Semitic?

Attacks on the Labour leader have coalesced around a sense that he is different, weird, a man apart. But is the criticism more sinister?
Ouija boards are the must-have gift this Christmas, fuelled by a schlock horror film

Ouija boards are the must-have festive gift

Simon Usborne explores the appeal - and mysteries - of a century-old parlour game
There's a Good Girl exhibition: How female creatives are changing the way women are portrayed in advertising

In pictures: There's a Good Girl exhibition

The new exhibition reveals how female creatives are changing the way women are portrayed in advertising
UK firm Biscuiteers is giving cookies a makeover - from advent calendars to doll's houses

UK firm Biscuiteers is giving cookies a makeover

It worked with cupcakes, doughnuts and macarons so no wonder someone decided to revamp the humble biscuit
Can SkySaga capture the Minecraft magic?

Can SkySaga capture the Minecraft magic?

It's no surprise that the building game born in Sweden in 2009 and now played by millions, has imitators keen to construct their own mega money-spinner
The King's School is way ahead of the pack when it comes to using the latest classroom technology

Staying connected: The King's School

The school in Cambridgeshire is ahead of the pack when it comes to using the latest classroom technology. Richard Garner discovers how teachers and pupils stay connected
Christmas 2014: 23 best women's perfumes

Festively fragrant: the best women's perfumes

Give a loved one a luxe fragrance this year or treat yourself to a sensual pick-me-up
Arsenal vs Borussia Dortmund: Alex Oxlade-Chamberlain celebrates century with trademark display of speed and intuition

Arsenal vs Borussia Dortmund

The Ox celebrates century with trademark display of speed and intuition
Billy Joe Saunders vs Chris Eubank Jnr: When two worlds collide

When two worlds collide

Traveller Billy Joe Saunders did not have a pampered public-school upbringing - unlike Saturday’s opponent Chris Eubank Jnr
Homeless Veterans Christmas Appeal: Drifting and forgotten - turning lives around for ex-soldiers

Homeless Veterans Christmas Appeal: Turning lives around for ex-soldiers

Our partner charities help veterans on the brink – and get them back on their feet
Putin’s far-right ambition: Think-tank reveals how Russian President is wooing – and funding – populist parties across Europe to gain influence in the EU

Putin’s far-right ambition

Think-tank reveals how Russian President is wooing – and funding – populist parties across Europe to gain influence in the EU
Tove Jansson's Moominland: What was the inspiration for Finland's most famous family?

Escape to Moominland

What was the inspiration for Finland's most famous family?