Tetley takeover rumours intensify

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The Independent Online
Whitbread yesterday ruled out a rights issue to help finance its pounds 1.05bn offer for Forte's restaurant business. But speculation was growing that the brewing and food retailing giant was poised to launch a separate bid soon for Carlsberg Tetley, in a deal that could lead to a cash call on shareholders.

Peter Jarvis, chief executive of Whitbread, the UK's fourth-biggest brewer, said: "We are very interested in strengthening this part of our business [brewing]. If I could find anything half as good as Boddingtons, I'd of course be interested."

The company bought Boddington's brewing operations in 1989. A purchase of Carlsberg Tetley could make Whitbread the largest brewer in the country, toppling Scottish & Newcastle Breweries, which recently bought Courage for pounds 435m to move into pole position.

Meanwhile, Granada was last night under pressure to raise its pounds 3.2bn bid for Forte or to give up, City analysts said. Kleinwort Benson suggested the offer might have to be raised by 15 per cent to ensure success. Granada has until 9 January to increase its bid.

A Granada insider said: "We've got plenty of room in terms of borrowing power, and banks have backed us without hesitation." But the company officially declined to comment on its intentions, saying only that the Whitbread offer undervalued the restaurant assets.

Gerry Robinson, chief executive of Granada, said the sale was "a brilliant deal from the point of view of Whitbread" but not in the best interests of Forte shareholders. He claimed that Granada's offer valued the restaurant holdings at a higher price-earnings multiple than the Whitbread offer, although Forte disputed this.

Forte said the deal, which would reduce debt by 80 per cent, made sense for shareholders, and hinted that a special dividend might be on offer when the final defence document is published on 2 January. The company is also expected to announce a new valuation for its hotels operations.

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