Granada's share price fell a further 3p to 632p yesterday, raising fresh concern about its ability to increase its pounds 3.3bn take-over bid for the Forte hotels group.
The fall means that Granada's share price is in effect below the 625p that the bid has been underwritten by BZW, Hoare Govett and Lazard Bros. Granada recently announced a 7.9p dividend, which implies an underlying share price of 624.1p.
Granada's shares are hovering just 1.33p above the cash alternative factored into the bid. The main offer is four Granada shares, plus pounds 23.50p cash for every 15 Forte shares, which yesterday rose 2p to 331.5p.
Shares in Granada have plunged more than 60p since the bid was launched. On the bid's first day the cash and equity offer valued each Forte share at 339p against 325.2p today.
One leading leisure analyst said: "It is very difficult to raise a takeover offer when the share price goes below the underwriting level. However, it is still early days."
Gerry Robinson, chief executive of Granada who normally does not work on Friday's, flew to Dublin yesterday to whip up support among Irish institutional shareholders.
Before he departed from London's City Airport, he attacked yesterday's latest missive from Forte which claimed that the document published by Granada on Thursday was "a transparent attempt to prop up its own falling share price".
Mr Robinson countered, and said Forte's latest document "is lightweight and is not going to impress anyone. There is not a word about profits or cash generation, let alone dividends. They seem to be just going through the motions to deflect attention from their own failings."
Sir Rocco Forte, chairman and chief executive of Forte, said: "Granada has failed to demonstrate any commercial logic for this deal." Granada's claim that it could boost Forte's profits be over pounds 100m was described as "astonishing".
Mr Robinson said, however, that "the fact Forte thinks our plan to improve its profits by pounds 100m per annum is 'astonishing' says it all". Only 1.5 per cent of Forte's shareholders have accepted so far.Reuse content