De Vere rejects partial bid from Guinness Peat

Guinness Peat Group, the activist investor, yesterday renewed its attempt to break up De Vere by launching a 415p-a-share offer for a further 25 per cent of the hotels group.

Guinness Peat Group, the activist investor, yesterday renewed its attempt to break up De Vere by launching a 415p-a-share offer for a further 25 per cent of the hotels group.

If successful, GPG, which already has a 10 per cent stake, plans to sell off the group's core four and five-star De Vere hotels arm and return the cash to shareholders. Blake Nixon, GPG's UK executive director who plans to seek a seat on De Vere's board, described the partial bid as an "each-way bet" for shareholders. But analysts were less sure, pointing out that with 35 per cent of the company GPG would have acquired a controlling stake without paying a premium.

Shares in De Vere, which fought off an onslaught from GPG three years ago, rose 4p yesterday to 425p.

Mr Nixon, who had to seek approval from the Takeover Panel to launch the unusual offer, said a restructuring of De Vere was "long overdue". He believes the group's mid-market Village sites, which target leisure travellers, offer more growth potential than asset-rich, upmarket hotels such as the Belfry in Warwickshire and the Cavendish St James in central London. "We will give people back a focused growth piece of paper and a lot of cash," he said.

De Vere, which under its new chief executive, Carl Leaver, is selling off underperforming sites, urged investors to reject GPG's partial offer, claiming it "significantly undervalues" the business.

Unless GPG manages to persuade shareholders to sell the full 28.5 million shares it is seeking to acquire, it will have to walk away. It also needs investors owning more than 50 per cent of the shares to back its move, otherwise under City takeover rules it will be forced to launch a bid for the whole group.

Asked how confident he was of succeeding, Mr Nixon said: "We know quite a few of the people on the register already and feel our story is compelling." He is planning to seek meetings with key institutional investors, such as Fidelity and Legal & General, in an attempt to win them over.

The De Vere hotel division was valued in the group's accounts at £551m, against the entire company's market valuation of £485m.

Mr Nixon's colleague Mark Butcher will also seek a seat on De Vere's board if the partial offer succeeds.