Granada yesterday bet almost pounds 400m that it would win the acrimonious battle for Forte, the hotels group. Around mid-morning it waded into the stock market snapping up 9.2 per cent of its prey.
The manoeuvre was seen by analysts as further indication that the television and leisure company was poised to clinch the battle.
One analyst said: "With the shares now held by institutions friendly to Granada, this looks like the bid is pretty much decided." Mercury Asset Management, which holds 15 per cent of Forte, is believed to be preparing to tender its shares to Granada. Other institutional shareholders were last night also leaning towards accepting the hostile offer.
Forte dismissed the share purchase, calling it a "desperate attempt to restore momentum to its misguided bid." Sir Rocco Forte, the chief executive, said: "Granada has yet again shown its true colours by favouring certain shareholders over others."
But Granada denied that it had given preference to certain buyers, claiming that its was "an open offer, and no one was given privileged position".
Analysts said only a radical move by Forte would now allow the company to escape with its independence intact. Among the possible last-minute defence strategies, the company was believed to be discussing the sale of one or more "trophy" hotels and to be holding out for a higher offer from Whitbread for its restaurants and budget hotels businesses, which the brewer has contracted to buy for pounds 1.05bn if the Granada bid fails.
Analysts said a higher bid would be hard to achieve, as Whitbread would have to convince its shareholders that a premium offer made sense.
Yesterday's dawn raid had been expected to accompany the unveiling of Granada's increased offer last week, but failed to materialise. Under Takeover Panel rules, Granada is allowed to buy up to 9.9 per cent of Forte shares, at prices up to but not exceeding the value of its cash- and-shares offer of 386p.
It can make additional purchases of up to a total of 29.9 per cent of Forte's shares at prices no higher than its all-cash offer of 362p.
A Granada adviser confirmed that the company had stopped short of buying the total amount available to it. "We wanted to leave ourselves some flexibility for the future."
According to sources, some of Forte's traditional institutional supporters were among those shareholders selling out yesterday, as volumes soared to more than 160 million. Market-makers and arbitrageurs were also among the sellers yesterday, according to dealers.
Separately, the Department of Trade and Industry confirmed yesterday that Granada would have to sell Forte's motorway services areas, branded as Welcome Break, if its bid succeeded, and said it would accept an undertaking to that effect in lieu of a referral to the Monopolies and Mergers Commission.
Granada's chief executive, Gerry Robinson, said: "We said at the outset that we recognised the potential competition issues involved and we therefore volunteered to dispose of all of Forte's motorway service areas."
Following Monday's announcement that Sir Rocco would split the roles of chairman and chief executive, Forte yesterday appointed John Hoerner, chief executive of Burton Group, as non-executive director. Sir Anthony Tennant's appointment as non-executive chairman was announced on Monday.
Following yesterday's hectic trading, Granada closed up 23p at 693p, just below its share price prior to launching the bid in November. Forte closed 14.5p higher, at 380.5p.