Granada's hotel sales talks yet to begin

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Negotiations on Granada's planned disposal of Forte's upmarket hotels will not begin in earnest for at least three weeks, sources close to the leisure and media company said yesterday, amid rumours that talks with at least one potential buyer, Marriott, had fallen through.

"There are no talks, but only talks about talks," a source said, adding that the planned pounds 2bn sale of the Meridien and Heritage hotels, along with a 68 per cent stake in the Savoy Group, required Granada to "prepare a large amount of thoroughly detailed information, before getting down to negotiations." "Basically, there are no talks to walk away from," a source close to the company said last night.

Granada's advisers are believed to have received a significant number of "expressions of interest," including offers for individual properties. All told, at least six serious buyers are believed to be ready to bid. They are believed to include the US group ITT-Sheraton and Bass, the UK leisure company.

Some bidders have suggested "novel and varied" ways of combining the assets, according to informed sources. However, it is Granada's intention to find a single buyer for the upmarket hotels, which would be tax-efficient, the company has said.

Granada declined to comment on the sale, but it is believed that Accor, the French hotels group, is a leading contender for the Meridien chain. Sir Rocco Forte, the defeated former chief executive of Forte, has also said he would bid to win back part of the lost family empire, although financing is not yet in place.

The Savoy stake, meanwhile, will take longer to sell, according to sources, as Granada intends to work closely with the Savoy management to identify and negotiate with buyers. Still topping the list for the Savoy shares is Prince Ben al-Waleed, the Saudi investor.

The disposals follow Granada's pounds 3.8bn hostile takeover of Forte, completed earlier this year. They are required to allow Granada to pay down some of the pounds 2.5bn in debt it took on to finance the bid.

Separately, it emerged yesterday that Charles Allen, Granada's chief operating officer, has begun a cross-country tour of the mid-market hotels the company intends to keep. The visits are believed to be aimed at reassuring staff following the bitter two-month bid battle.