MAM keeps buying Forte

Fund manager expected to back Granada's bid

Mercury Asset Management has taken its stake in Forte to over 15 per cent, following a third day of frenzied trading in the shares of the hotel and restaurant group, writes Mathew Horsman. All told, 20 million shares changed hands, as volumes in the three days since Granada upped its bid to pounds 3.8bn topped 100 million.

Analysts and other institutional shareholders predicted that MAM, which bought 12 million shares on Wednesday alone, would use its muscle to back Granada's hostile bid, which could prove crucial to the television and leisure company's success.

Forte closed at 3681/2p, compared with the all-cash offer from Granada of 362p. A higher cash-and-shares bid values Forte at 379p, or about pounds 3.8bn, on Granada's close last night of 664p.

Sir Rocco Forte and the Granada chairman Gerry Robinson - pictured above right with Charles Allen, reviewing the new menu they would introduce at Little Chef if their bid goes through - visited institutional investors yesterday to put their final case. One fund manager said the decision was simple: "Do you think a pure hotels company will make more money for shareholders than a mixed hotels and restaurants company?" He added that his fund would make a final decision next week.

Meanwhile, the two companies traded criticisms over Forte's promise of a 20 per cent annual dividend increase in each of the next three years, and over Forte's plans to buy back pounds 800m worth of shares.