Granada fires new broadside in LWT takeover battle

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The Independent Online
GRANADA GROUP yesterday questioned the quality of LWT Holdings' profits last year in an attempt to close the gap between its takeover offer and the target's market price.

Earlier this month LWT estimated, as part of its defence against the pounds 700m hostile bid, that taxable profits would increase by 43 per cent to pounds 43.8m, considerably above market estimates.

Gerry Robinson, Granada's chief executive, said: 'It is unusual to come out 20 per cent ahead of analysts' expectations. Under the circumstances some careful scrutiny is required.'

The bidder yesterday also pointed out that the London weekend licence-holder's ability to generate profits from cash flow was substantially lower than its own.

In a letter to LWT shareholders, the third since the bid started, Granada maintained that LWT had converted 49 per cent of cash generation into profits before interest and tax compared with 95 per cent by its own television business.

'Why has LWT been so unsuccessful in generating cash?' the letter asked.

The attack helped to push Granada's shares 16p higher to 585p. But LWT shares, up 18p to 706p, closed 4p above Granada's bid terms.

The bidder is offering six of its own shares for five in LWT, or a cash alternative of 528p a share.

Sir Christopher Bland, LWT's chairman said: 'Granada's latest message to LWT shareholders smacks of desperation. This offer will not succeed.'

Granada, which speaks for 20.2 per cent of LWT, has extended its offer by a fortnight. Last week the Takeover Panel stopped the bid clock while Granada holds discussions with the Office of Fair Trading over the possible impact on advertising sales. It will be restarted two days after the talks end.

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