Granada wins control of Forte

LEISURE and media company Granada has won control of hotel and catering group Forte after a bitter £3.9 billion takeover battle.

Granada said yesterday that it had received acceptances from shareholders with 66.68 per cent of Forte, with the total still to be counted, and so emerged victorious from one of the biggest and most dramatic takeover struggles Britain has witnessed in recent years.

"We are naturally delighted with the outcome. Sir Rocco (Forte) and his colleagues put up a powerful and spirited defence," an elated Granada chief executive, Donegal born Gerry Robinson said.

"We said from the outset that we regarded this as a significant opportunity for Granada and that we could realise substantial value from it," he added. "Our job now is to take full advantage of the potential for the benefit of existing and new shareholders alike."

Defeat was a bitter blow for Forte chairman Sir Rocco Forte, who had fought tooth and nail to preserve the independence of a company which traces its origins to a milk bar run by his father in central London in the 1930s.

"Naturally we are all disappointed. I am proud of the people of Forte and their commitment which has created such value for shareholders," he said.

"This was a battle between two opposing philosophies. We have lost the bid. I do not believe we have lost the argument," added Sir Rocco, striking a defiant note.

The writing was on the wall for Forte from early yesterday when a key shareholder came out in support of Granada. Fund manager Mercury Asset Management, which holds more than 14 per cent of Forte shares and has a similar stake in Granada, announced its backing for Granada a few hours ahead of the final deadline for the offer.

Mercury gave no reasons for its decision but is known to be an admirer of Granada's management and Mr Robinson in particular. Granada launched an initial £3.4 billion bid for Forte on November, 22nd and sweetened it with a special dividend and increased cash alternative two weeks ago.

Granada has lambasted the Forte management throughout the takeover battle and has said that it believes it can improve Forte's profits by £100 million a year. Family run Forte fought the bid and recovered from an uncertain start to mount what analysts called a "robust" defence.

Analysts said that the battle was positive in that two clear alternative strategies for Forte have emerged. Granada plans to sell off the luxury Exclusive and Meridien business hotels as part of a series of disposals aimed at realising a total of £2.1 billion. Market sources believe that none of Forte's hotels, including the Shelbourne in Dublin, will be sold off in any asset disposal programme by Granada.

Granada plans to focus on the mid market and budget end of the hotel sector 1 along with roadside restaurants such as the familiar Little Chef and Happy Eater brands. By contrast the Forte management wanted to relaunch the firm as a pure hotels company, focusing on mid market and more expensive properties.

Forte had a conditional agreement to sell the roadside restaurants and budget Travelodge hotels to brewer Whitbread for £1.05 billion. The deal was conditional on the Granada bid failing.

Granada shares were down 16p to 680p at the close of trading while Forte had added 12p to 385p.