Granada holds on to Meridien in hotels sale
Thursday 23 May 1996
"We came to the conclusion that we could enhance profitability at the Meridien hotels, and that it would better for shareholders," Charles Allen, Granada's chief executive, said.
However, a Granada insider conceded the chain, which is largely run on management contracts, could still be sold off later, depending on market interest and the results of the profit enhancement plan.
Launching its hostile bid last November, Granada had said it would sell Forte's trophy hotels, its chain of motorway service areas, a majority stake in the Savoy Group and a 25 per cent stake in Alpha Airports, the catering company, raising about at least pounds 500m.
In the heat of the battle, however, Granada's then-chief executive Gerry Robinson, who has since become chairman, changed strategy, promising to sell the Exclusive and Meridien chains to help pay down the crippling debt Granada would take on to finance the acquisition.
"When we came to look closely at the hotels, we began to make a determination about their future profitability," Mr Allen said yesterday. "We saw there was considerable scope to tighten up the Meridien chain."
Large shareholders were told of the decision to keep the chain yesterday, and were supportive of management, analysts said. "There is apparently a high level of comfort that the team of Gerry Robinson and Charles Allen can enhance profits," said one leading analyst. "There is certainly no problem servicing the debt."
The exclusive hotels will be offered to as many as 60 buyers who have "pre-qualified" for the sale, Granada insiders said. A sales memorandum with detailed information on the 17 properties will be sent to all those willing to sign a confidentiality agreement. It is expected that a short- list of four potential buyers will emerge, followed by a auction.
Sir Rocco Forte, who lost the bitter battle over his family company, is expected to be among the bidders for at least some of the exclusive hotels, according to his advisers. He has been attempting to raise financing in the City to buy back as much of the core hotel assets as possible.
It is believed some buyers will bid for several properties, particularly those dubbed "sub-brands" by Granada. These include the two Westbury hotels (in London and New York) and the two Hotel Plaza Athenee (in New York and Paris.
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