Granada wins support with increased bid for Forte

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The Independent Online
THE pounds 3.8bn battle for Forte enters its final week with institutional investors leaning towards the bidder, Granada, after it delighted them with a revised offer last week.

A senior figure in one institution said that nothing was yet decided but that Granada seemed to have the better story. Forte would need to pull out something very impressive - such as a huge price for a trophy asset - to change his mind.

On Forte's break-up defence, he commented: "Parachuting in highly paid advisers is all very well. What happens when all the advisers go away? Will things go back to what they were before?"

The pivotal shareholder, Mercury Asset Management, spent the week aggressively buying up Forte stock, lifting its stake above 15 per cent, suggesting it favours Granada. There is speculation that Morgan Grenfell Asset Management and Scottish Widows also support Granada.

The bid battle - one of the most acrimonious in recent years - will be decided by MAM and a few dozen institutional investors on Tuesday week. Forte's biggest 10 investors own more than 35 per cent of the shares.

Both sides will continue an aggressive lobbying of institutions this week. Forte will also bring out its final defence document, in which it plans to reiterate the quality of its rump hotels business. It is trying to quell investor fears that the share price will fall back sharply if the bid fails.

It also wants to make capital out of Granda chief executive Gerry Robinson's U-turn on his plans for the Meridien chain. At first he planned to keep it; now he is proposing to sell it.But the City seems unconcerned about the change of heart.

One institutional investor welcomed it and suggested that the change of strategy might have been prompted by Granada shareholders.

Granada will question Forte's ability to deliver 20 per cent dividend growth for three years and the claim that its share buyback proposal would be earnings enhancing.

It will also continue to put the spotlight on Forte's disappointing track record and boardroom extravagance. For instance, it plans to dispose of the Forte corporate jet, which has an estimated running cost of at least pounds 650,000 a year.

Forte has defended the jet . A spokesman said: "The jet costs only pounds 250,000 more than commercial flights. It's used almost totally for business."