Granada raises LWT offer to pounds 775m: Robinson says he would have paid more to avoid pain of a contested takeover

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The Independent Online
GRANADA yesterday lifted its final offer for LWT by almost 10 per cent, although it indicated that it would probably have paid more had it been able to secure the support of the broadcaster's board.

On Monday evening Granada attempted to negotiate an agreed deal with LWT, but was rebuffed.

Gerry Robinson, Granada's chief executive, said it would have been worth paying to avoid the pain and expense of a contested bid.

'Believe me, we would have loved to reach an agreement,' he said. However, it had been clear that there was a big gap and 'no clear room for bargaining'.

The price LWT had demanded before it would recommend the bid - rumoured to be about 200p more than Granada's original bid - was 'beyond anything we would be prepared or able to provide'.

The conglomerate is now offering 13 new Granada shares and 100p in cash for every 10 LWT shares. That values each LWT share at just under 750p, and the group at pounds 775m. The cash element is designed to include the expected LWT final dividend and there is a 686p all-cash alternative.

The offer, a 9.8 per cent increase on the value of Granada's previous bid, represents just over 26 times LWT's estimate of its 1993 earnings and more than 32 times its 1993 cash flow. It is also a premium of 100 per cent to the weekend broadcaster's share price on 28 June, the day before Granada, which has 17.5 per cent of its target, first acquired a stake in LWT.

LWT shares closed up 35p at 737p; Granada's closed down 2p at 568p. Shareholders have until 25 February to accept the offer, which has been declared final.

Sir Christopher Bland, LWT's chairman, immediately rejected it, saying that it 'seriously undervalues the past record and future potential' of the company. LWT was a strong and well-managed company, with an outstanding record for delivering shareholder value, he said.

LWT's recent estimate of 1993 earnings of 28.4p a share was 25.7 per cent higher than the figures Granada had been using when it fixed its original offer price, 'yet the number of Granada shares now on offer to LWT shareholders has only gone up by 8.3 per cent'.

Mr Robinson said LWT's arguments for independence had been swamped by the reality that was now Carlton and MAI. It was also hard to see how LWT's share price would not fall if the Granada bid was thwarted, he said.

Mr Robinson said there was 'clearly' no role for Sir Christopher in a merged group, but he hoped some of the top management would stay.

Granada said its own trading in the first quarter had 'continued the excellent progress shown last year, with overall performance ahead of our expectations'.

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