Temperance trust could hold key

JOHN SHEPHERD

In theory, the outcome of the bid could be influenced by a small number of shares controlled by the Council of Forte, a trust set up in 1904 to "further temperance", and inherited by the Forte company when it merged with Trust Houses in 1970 to form Trusthouse Forte.

The trust owns only 780,000 shares, less than 0.1 per cent of the total 943 million Forte shares in issue, but has the right to the same number of votes as all the other shareholders put together.

However, it is by no means certain that the Panel for Takeovers and Mergers will allow the council to use its 50 per cent share of the votes in the takeover fight.

Granada is relying on the panel taking the same stance as it did in 1971 when the council's right to vote was neutralised during the failed bid by Allied Breweries for Forte. Judith Shepherd, a member of the panel executive, said yesterday that no decision had been reached yet. "We need to hear the views of Forte and the council."

The delicate power issue will, no doubt, be debated at length by the council, which is headed by Hugh Astor, and which consists of three lords, an earl, a duke and two knights of the realm.

If the council's vote is again declared null and void under Rule 10 of the Takeover Code, Granada's strategy will boil down to gaining control of more than 50 per cent of the shares held by other investors. In effect, ordinary shareholders would have a full vote per share rather than half a vote.

The council is free to declare itself neutral ahead of any binding decision by the panel. One of the issues the council will have to take account of is the basic requirement for trustees to look after the best interests of the trust's beneficiaries.

The aim of the trust is to distribute income for charitable purposes. However, the amount of available, distributable dividend income from shares in Forte has dwindled in recent years and will be another main point to be considered when the council debates the bid.