MAM swings the battle to Granada

JOHN SHEPHERD

and MATHEW HORSMAN

With its victory confirmed, Granada now faces the hard part: making its pounds 3.8bn takeover work. Analysts agree that it will not be easy to prune pounds 2bn worth of assets in the space of a few months, as Granada has promised to do.

The challenge looks just as great for the other two companies whose futures have been inevitably altered by the bid: Whitbread and the Savoy.

The pressures on Granada will be by far the most intense. It hopes to be left finally with the restaurants and budget hotels it had coveted since the start, and a gearing of 70 per cent. But if there are glitches in the planned disposal programme, the stock market could take its revenge.

Granada is aware of the pressures and the danger of having a powerful shareholder such as Mercury Asset Management peering over its shoulder.

The list of impending sales is long, and could produce some indigestion in the leisure market. Shares in Alpha Airports and Savoy Group are both earmarked for early sale, followed by the 27-strong Welcome Break motorway service areas, which could go to Whitbread.

In addition, Granada will sell the Meridien and Exclusive chains, for which it says it has already identified buyers, and the "trophy" hotels such as the Grosvenor House in London.

Warns an analyst: "There are definitely risks involved, and there had better be a good steady news flow over the next 12-18 months."

The disposal of Forte's stake in Savoy Group will absorb by far the greatest amount of management time. Analysts say the successful takeover has put Savoy into play. For more than a decade the Savoy, which also owns Claridges and other hotels, has fought off several predatory moves by Forte.

The company has recently stated its desire to remain independent. That, however, may be wishful thinking, with Granada claiming that it has already received several expressions of interest for the Savoy stake it inherits from Forte.

There is an outside chance that the Forte family may seek solace by acquiring the Savoy shares, a move which, according to sources close to the Wontner family, would be welcomed. Analysts, however, believe that the Savoy's recovery could be accelerated if it became part of an international group.

Opponents of that option stress that the mystique of the Savoy would be lost. "People stay at the Savoy because of what it is and stands for. They do not wish to stay at what may eventually become the Marriott Savoy or the Sheraton Savoy," an insider said yesterday.

Whitbread, for its part, has fast become accustomed to disappointment. Failure to buy the Happy Eater and Little Chef roadside restaurants from Forte can be added to a long list of past acquisition failures.

"We gave it our best shot," a Whitbread spokesman said of the Granada win yesterday. "We have ambitious growth plans for our existing brands and we're always on the look-out for new ones." High on the agenda is a desire to buy Allied Domecq's stake in Carlsberg Tetley. But this is also being eyed by Bass, toppled from pole position in the brewing league when S&N bought Courage.