Granada, takeover battles, and what people say:Comment

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The Independent Online
Perhaps deservedly, what is said in bid battles often tends not to be scrutinised that closely or taken that seriously. Exaggeration and hyperbole are, after all, part of the cut and thrust of any contested takeover. None the less, advisers do have a duty of care over the claims and promises being made.

Granada yesterday gave details of the asset disposal programme promised at the time of its bid for Forte. In so doing it let drop that the Meridien hotels are no longer for sale. The question is, does this amount to a breach of promise? It was certainly implied that Meridien was part of the package of planned disposals in the final stages of the bid. That Granada can suggest one set of strategies in the heat of the battle, then calmly execute a U-turn, must be viewed as a bit rich.

It wouldn't be the first time. At the outset of the battle, in November, Granada said it would sell the trophy hotels, the Savoy stake, the Alpha Airports holding and, of course, the Welcome Break motorway services operation, which it couldn't have kept anyway due to competition rules. Of the rest, it would reinvigorate the roadside restaurants and improve the profitability of the remaining hotel operations.

That was the stated strategy until Granada unveiled its increased offer. Suddenly, Gerry Robinson, the chief executive, was no longer "wedded" to the Exclusive and Meridien hotels, having decided that the company couldn't improve profits enough to warrant turning down attractive offers from other buyers. Mr Robinson even hinted he had intended all along to dump the hotels, but had worried that Forte would accuse him of asset- stripping. At the same time, however, the bigger disposal programme helped to reassure investors and bankers over the financial risks of the increased offer. Now, apparently, we are back to plan A, or at least a version of it.

Hardly any shareholders are uncomfortable with the latest change of heart. Most seem convinced that Granada can eke out enough profits to more than meet debt-servicing needs. But would Granada have got the chance to prove the point had it not suggested the sale in the heat of the battle? In other words, would Granada have won? The answer to this is probably yes, but the point can never be proved. Circumstances change and there are often good commercial reasons why it would be unfair to hold companies to the letter of what they say during the heat of battle. Even so, the Forte camp has a right to feel aggrieved.