Granada's Last Shot in Battle of Little Chef
Horsman, Mathew, The Independent (London, England)
Granada, the television and leisure giant, was expected to raise its bid for Forte this morning in a last-ditch effort to win a hostile takeover battle.
There was also speculation it would pounce in early trading today, attempting to snap up a block of Forte shares to anchor its takeover bid.
At stake is ownership of Forte's chain of luxury, mid-market and budget hotels, as well as its 420 Little Chef and Happy Eater restaurants.
The consensus in the City was for an increased offer in cash and shares worth about 370p, and a fully funded cash offer of about 350p, valuing Forte at about pounds 3.6bn.
Granada was also expected to unveil additional details today of its plan to enhance Forte's profitability by pounds 100m a year.
But there were widely divergent views last night, as analysts and dealers tried to second guess Granada's chief executive, Gerry Robinson. Some analysts were calling for a "knock-out" bid of perhaps 380p a share. But Granada sources cautioned against too high a figure, pointing out that Granada's own shareholders, many of whom also own stock in Forte, would be uncomfortable if the company was seen to be overpaying merely to clinch the battle.
"Gerry is definitely between a rock and a hard place," said one analyst. "If he bids too high, it will look unjustifiable by his own analysis of Forte's prospects. But if he bids too low, he'll lose."
The finely balanced decision was believed by City analysts to be too close to call. A leading leisure analyst said: "There are four options: either he walks away, leaves the same bid on the table, increases it by a bit, or by a lot. Clearly, Granada has managed to keep its intentions very close to its chest."
The company had until today to sweeten its offer under Takeover Panel rules. …