Whitbread deal on restaurants boosts Forte's defence

Late rally: Agreement with brewing giant turns tables on chief executive of Granada as drama intensifies over hostile pounds 3.2bn bid




Forte will today announce the proposed sale of its pounds 1bn restaurant business to Whitbread, to head off demands for clarification from the Takeover Panel.

The sale, aimed at fending off a pounds 3.2bn hostile bid from Granada, was already the subject of well-informed reports in the press over the Christmas holiday.

Whitbread is expected to offer pounds 900m in cash and to assume around pounds 100m in debt in return for the Little Chef, Happy Eater, Welcome Break, and Cote France chains, which Forte originally intended to demerge in an attempt to increase shareholder value and to scupper Granada's bid. The agreement will also involve Forte's Travelodge hotels business. The Wheeler's Restaurant chain, comprises six sites, will be sold off by Forte separately.

If successful, the deal would top Whitbread's earlier purchases of 16 Marriott hotels and the pounds 200m David Lloyd Leisure group, and make up for the company's defeat at the hands of Scottish & Newcastle, which paid pounds 450m for Courage, the Australian-owned brewers, in a bitter bid struggle in May.

It would also confirm the negotiating skills and quick response of Peter Jarvis, Whitbread's chief executive, who has spearheaded the company's expansion in the leisure and catering markets.

Forte is expected to give a binding commitment to complete the deal, which is conditional on the Granada offer for Forte lapsing.

Since the bid from Granada was tabled last month, Forte chairman Sir Rocco Forte has already sold US Travelodge for pounds 114m, Lillywhites for pounds 28.5m and Griersons for pounds 23m, and announced his intention to dispose of the group's controversial stake in the Savoy Group of hotels, which could be worth pounds 220m.

A deal with Whitbread will increase the potential proceeds of the latest disposal programme to around pounds 1.4bn, and virtually wipe out Forte's debts, at the cost of shrinking the company's business by one-third.

Forte has until 2 January to publish its final defence document, which could also include a forecast increased dividend. The deal with Whitbread, however, is conditional on Forte shareholders first rejecting Granada's bid, which is due to close on 9 January.

The bid was unveiled in London on 22 November, while Sir Rocco was shooting in Yorkshire. Forte's deal with Whitbread appears to turn the tables on Granada's chief executive Gerry Robinson, who was spending Christmas at home in county Donegal. The Forte restaurants Whitbread plans to buy are precisely the assets which Granada most wants.

Granada's initial offer is for four shares plus pounds 23.50 in cash for every 15 Forte shares. At last week's closing price of 635p for Granada the offer is almost exactly in line with Forte shares at 326p in the market and currently values Forte at pounds 3.23bn.

A deal with Whitbread ahead of the first closing date for the Granada offer will shift the onus back on to the Granada camp. Mr Robinson will now have to increase his offer by at least another pounds 600m, according to independent analysts in the City, or sit tight and risk seeing the Forte shareholders vote for the Whitbread cash. That would give Sir Rocco and his fellow directors time to complete the transformation of their company into a focused hotels business. A higher bid must be made before 9 January unless Granada now asks the Takeover Panel to stop the bid clock.

If Granada's bid fails, Mr Robinson will come under increasing pressure from his shareholders, especially institutions. Some in the City had suggested he had chosen the wrong target, saying that companies similar to Granada would have made more sense. A favourite choice is Pearson, the media and financial services company, viewed as being significantly undervalued in the market.

Battle for Forte

The bid so far:

22 November: Granada launches pounds 3.3bn bid

24 Nov: Offer document published

3 December: Forte announces sale of Lillywhites

8 Dec: Defence document published by Forte, outlines demerger proposals

19 Dec: talks to sell White Hart hotel chain collapse

20 Dec: sale of Forte's US Travelodge chain announced

21 Dec: Council of Forte given leave to vote as it wishes

24 Dec: planned sale of restaurants to Whitbread


Key dates to come:

2 January: Day 39 (no more financial information from

the defender)

9 Jan: Day 46 (Granada last chance to increase bid

barring Takeover Panel ruling that Whitbread

constitutes white knight bidder)

25 Jan: Day 60: normal bid period ends

Start your day with The Independent, sign up for daily news emails
Barn owls are among species that could be affected
charity appeal
Sarah Silverman (middle) with sister Reform Rabbi Susan Silverman (right) and sister actress Laura Silverman (left) at Jerusalem's Western Wall for feminist Hanuka candle-lighting ceremony
peopleControversial comedian stages pro-equality Hanukkah lighting during a protest at Jerusalem's Wailing Wall
Arts and Entertainment
The Bach Choir has been crowned the inaugural winner of Sky Arts’ show The Great Culture Quiz
arts + ents140-year-old choir declared winner of Sky Arts' 'The Great Culture Quiz'
After another poor series in Sri Lanka, Alastair Cook claimed all players go through a lean period
cricketEoin Morgan reportedly to take over ODI captaincy
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

iJobs Job Widget
iJobs Money & Business

Carlton Senior Appointments: Private Banking Manager - Intl Bank - Los Angeles

$200 - $350 per annum: Carlton Senior Appointments: Managing Producer – Office...

Carlton Senior Appointments: San Fran - Investment Advisor – Ind Advisory Firm

$125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...

Sheridan Maine: Commercial Finance Manager

Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Sheridan Maine: Regulatory Reporting Accountant

Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Day In a Page

Homeless Veterans appeal: 'You look for someone who's an inspiration and try to be like them'

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Could cannabis oil reverse the effects of cancer?

Could cannabis oil reverse effects of cancer?

As a film following six patients receiving the controversial treatment is released, Kate Hilpern uncovers a very slippery issue
The Interview movie review: You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here

The Interview movie review

You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here
Serial mania has propelled podcasts into the cultural mainstream

How podcasts became mainstream

People have consumed gripping armchair investigation Serial with a relish typically reserved for box-set binges
Jesus Christ has become an unlikely pin-up for hipster marketing companies

Jesus Christ has become an unlikely pin-up

Kevin Lee Light, aka "Jesus", is the newest client of creative agency Mother while rival agency Anomaly has launched Sexy Jesus, depicting the Messiah in a series of Athena-style poses
Rosetta space mission voted most important scientific breakthrough of 2014

A memorable year for science – if not for mice

The most important scientific breakthroughs of 2014
Christmas cocktails to make you merry: From eggnog to Brown Betty and Rum Bumpo

Christmas cocktails to make you merry

Mulled wine is an essential seasonal treat. But now drinkers are rediscovering other traditional festive tipples. Angela Clutton raises a glass to Christmas cocktails
5 best activity trackers

Fitness technology: 5 best activity trackers

Up the ante in your regimen and change the habits of a lifetime with this wearable tech
Paul Scholes column: It's a little-known fact, but I have played one of the seven dwarves

Paul Scholes column

It's a little-known fact, but I have played one of the seven dwarves
Fifa's travelling circus once again steals limelight from real stars

Fifa's travelling circus once again steals limelight from real stars

Club World Cup kicked into the long grass by the continued farce surrounding Blatter, Garcia, Russia and Qatar
Frank Warren column: 2014 – boxing is back and winning new fans

Frank Warren: Boxing is back and winning new fans

2014 proves it's now one of sport's biggest hitters again
Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas