LWT has until Friday to publish information about its rejection of Granada's offer, and a surprise pounds 40m profit forecast, up 30 per cent, is likely to be the key plank in its defence. Brokers were forecasting profits of between pounds 35m and pounds 37m.
Sir Christopher Bland, chairman, would not comment on the forecast but said: 'Our defence will be our profit forecast and our past record.'
Speculation that LWT may be preparing a surprise defence is waning, and many in the City believe that a forecast profit rise would not be enough to keep LWT independent. Granada said that even if LWT made profits of pounds 45m, its bid would still offer an exit multiple of 24, which it described as generous.
LWT shareholders' hopes that Granada would sweeten its offer receded when talks between the London franchise and Yorkshire-Tyne Tees collapsed. LWT had hoped to escape Granada in a deal whereby LWT would have taken over Yorkshire, and Anglia Television would take over Tyne Tees. Granada now feels under less pressure to raise its offer, though the company would be prepared to pay a higher price to secure an agreed bid.
Granada's latest circular to shareholders says LWT is a 'one business' operation that did not have the muscle to take advantage of new opportunities in television.
Sir Christopher said: 'Granada's circular is an ill-judged attempt to stampede LWT shareholders into accepting Granada's inadequate offer. Granada remains a conglomerate with a patchy record over the last five years, anxious to prop up its declining rental business through acquiring LWT.'
Granada says that if the offer is rejected, LWT's share price will probably fall. Sir Christopher said the relaxation of ITV takeover rules and the shortage of television franchises meant that TV companies' high ratings would continue. 'I believe that the sector as a whole will be very strong and outperform the market for some years.'Reuse content