KKR to bid for ex-Forte hotels

US break-up specialist joins the race for the Meridien and Exclusive chains
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The Independent Online
AMERICAN break-up merchant Kohlberg Kravis Roberts has joined the race for Forte's upmarket Meridien and Exclusive hotels, seeking to trump a rival offer from Sir Rocco Forte after Granada's pounds 3.9bn takeover victory last week.

Glenisla, KKR's UK investment arm, is headed by Ian Martin, who is also a non-executive director of Granada, a position that will fuel cries of a conflict of interest.

KKR staged the $25bn (pounds 17bn) takeover of US food and tobacco group RJR Nabisco in 1988, the world's biggest ever, and set up Glenisla two years ago to buy undervalued European companies.

Mr Martin worked with Granada chief executive Gerry Robinson while at drinks giant Grand Metropolitan, where he was deputy chairman before quitting in early 1994 after being pipped for the post of chief executive.

Mr Robinson made his name with the buyout of Compass, Grand Met's catering arm, in 1987, four years before joining Granada.

Sir Rocco and KKR are just two of at least half-a-dozen potential buyers for the hotels, which Granada intends to sell. Other likely bidders include French hotelier Accor, US chains Hilton, Marriott and ITT Sheraton, and possibly UK brewer Bass, which owns Holiday Inns.

"There are at least four trade buyers and a number of financial buyers. But it's early days and Granada is under no pressure to sell," a Granada source said.

Sir Rocco will spend this week closeted with advisers, preparing an offer of up to pounds 2.5bn in an audacious comeback. So far Granada has pledged to sell only the 85 Meridien hotels and 18 Exclusives, including the Waldorf and the Grosvenor House in London. Forte's stake in the Savoy group and its Wellcome Break motorway service stations are also up for grabs. Analysts estimate the disposals may fetch more than pounds 2bn, leaving Granada with the Little Chef and Happy Eater restaurants and the mid-market Forte Posthouse, Lodge and Heritage hotels.

Sir Rocco, however, also wants the 82-strong Heritage chain, raising the possibility of a battle for the family name. "It would be a very elegant solution for Granada. It's a very elegant solution for Sir Rocco," one family adviser said. "From Sir Rocco's point of view, he wants the hotels. If the name comes too, then so be it."

Last November, Glenisla clinched its first deal with the pounds 205m buyout of Reed's local newspapers.

This weekend recriminations from the Granada battle were still reverberating around the City, with erstwhile Forte ally Whitbread denying any blame for the defeat.

Whitbread sources said Forte requests for a joint pounds 800m market raid, made at a meeting last Sunday, had been strongly rebuffed by advisers NatWest, James Capel and Barings. An offer for fund manager Mercury Asset Management's 14 per cent stake, which helped Granada's win, was also "not an option", they said.

The brewer had tied up a deal to buy Little Chef and Happy Eater and has since approached Granada over Wellcome Break.