LWT may seek foreign buyer to stop Granada: French group is a possible white knight - Poison pill acquisition is ruled out

LWT is believed to be exploring the possibility of enlisting a European 'white knight' in an attempt to avoid the clutches of Granada, the leisure conglomerate that yesterday launched a hostile all-paper bid worth 580p a share.

Sir Christopher Bland, LWT's chairman, believes the share price, which has soared since Granada bought a stake in June, is attributable to an international re-rating of television stocks.

'There is more than just pure bid excitement. We are less than two weeks into deregulation. The Continental TV bidders aren't even in the market yet,' he said.

Generale des Eaux, France's fifth-largest company, is understood to be interested in buying LWT, possibly in conjunction with other French groups. Generale owns 20 per cent of the French satellite broadcaster Canal+ but looks likely to surrender that stake as part of a deal with Havas, the media company, and may wish to reinvest in television elsewhere.

It is thought that LWT would see a link-up with a foreign bidder as preferable to being bought by Gerry Robinson's Granada. Despite assurances yesterday that weekend meetings were 'brief and friendly', there appears to be little love lost between the two groups.

Mr Robinson, Granada's chief executive, has so far declined to promise to retain LWT's highly respected top management if his bid is successful.

A 'poison pill' style acquisition of another franchise holder - for example of Yorkshire-Tyne Tees, in which LWT holds 14 per cent - now seems out of the question for LWT since the approval of LWT's shareholders would be necessary in the light of the bid. Granada holds 17.5 per cent of LWT, and is unlikely to support such a move.

Sir Christopher also seemed to rule out the move. 'This is a management which owns 10 per cent of the business. Those aren't circumstances in which you would take a poison pill.'

Granada is offering six Granada shares for every five LWT shares currently held, valuing each LWT share at around 580p. The bid, conditional on the passing of the ITV rule changes and clearance from the competition authorities, had been widely expected and yesterday the share price closed virtually unchanged, up 1p at 586p. There is a cash alternative of 528p per LWT share.

The offer is a multiple of 25 times LWT's prospective earnings, but Mr Robinson believes there will be sufficient gains from rationalising the two operations to ensure there will be no earnings dilution for his shareholders.

Granada said LWT was 'too small' to survive on its own given the radically altered conditions confronting the TV industry. 'In a changing market, what opportunities there are will require significant resources,' Mr Robinson said. 'Without that, you risk being squeezed by both buyers of programmes and buyers of advertising.'

With a market capitalisation of more than pounds 2bn, Granada is more than three times the size of LWT.

Combining Granada Television and LWT would produce a potential audience of 16 million people and more than 22 per cent of ITV's advertising revenues. Mr Robinson said it would offer advertisers a counterweight to a merged Carlton- Central, which would have more than 30 per cent of all advertising.

In the year to 2 October, Granada's turnover rose 21 per cent to pounds 1.6bn while its pre-tax profits were up 53 per cent at pounds 176m. Granada made a number of acquisitions during the year, notably Sutcliffe, the business services group. Without these, turnover would have been little changed, while underlying profits rose 16 per cent to pounds 187m.

Despite interests that include a 13.5 per cent stake in the satellite broadcaster BSkyB, the dominant contributor to Granada's revenues and profits remains its traditional rental business. Last year, the rental division produced about a third of group turnover and more than 56 per cent of operating profits.

Granada TV was the second-biggest contributor, generating operating profits of pounds 43m last year. These were up 30 per cent, mainly due to increased programme sales. Granada is recognised to be the strongest ITV network programme producer.

View from City Road, page 32

(Photograph and graph omitted)

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
Joe Cocker performing on the Stravinski hall stage during the Montreux Jazz Festival, in Montreux, Switzerland in 2002
musicHe 'turned my song into an anthem', says former Beatle
News
Clarke Carlisle
sport
Sport
footballStoke City vs Chelsea match report
Arts and Entertainment
theatreThe US stars who've taken to UK panto, from Hasselhoff to Hall
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Life and Style
Approaching sale shopping in a smart way means that you’ll get the most out of your money
life + styleSales shopping tips and tricks from the experts
News
newsIt was due to be auctioned off for charity
News
Coca-Cola has become one of the largest companies in the world to push staff towards switching off their voicemails, in a move intended to streamline operations and boost productivity
peopleCoca-Cola staff urged to switch it off to boost productivity
Environment
Sir David Attenborough
environment... as well as a plant and a spider
Voices
'That's the legal bit done. Now on to the ceremony!'
voicesThe fight for marriage equality isn't over yet, says Siobhan Fenton
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

The Jenrick Group: Night Shift Operations Manager

£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...

SThree: Trainee Recruitment Consultant - LONDON

£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

SThree: Graduate Recruitment Consultant

£20000 - £25000 per annum + OTE £35000: SThree: SThree are a global FTSE 250 b...

Day In a Page

Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all
The week Hollywood got scared and had to grow up a bit

The week Hollywood got scared and had to grow up a bit

Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

Panto dames: before and after

From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
Thirties murder mystery novel is surprise runaway Christmas hit

Thirties murder mystery novel is surprise runaway Christmas hit

Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

Anne-Marie Huby: 'Charities deserve the best'

Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
The botanist who hunts for giant trees at Kew Gardens

The man who hunts giants

A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there