Takeover Panel rebukes Forte on claim of support

RUSSELL HOTTEN

The Takeover Panel last night rebuked Forte in a final twist to the bitter two-month takeover battle with Granada. It followed comments by Richard Power, Forte's communications head and recent appointment to the main board, that the company had the support of up to 35 per cent of shareholders.

The Panel's intervention will cause acute embarrassment at Forte, as it comes just before tomorrow's bid deadline when the company is seeking the support of last-minute voters.

An 11th-hour attempt to stop Granada's pounds 3.9bn bid will be made today when Whitbread meets the hotel group's largest shareholder, Mercury Asset Management, which has a 14.6 per cent stake.

Granada is thought to have contacted the Panel last night after learning of Mr Power's remarks. Such comments are deemed to be a breach of the Takeover Code as they may "steamroll" shareholders who have not made up their mind.

The Takeover Panel immediately contacted Forte's advisers, SBC Warburg, and Mr Power was expected to release a statement late last night retracting his comments. Granada said the remarks were clearly a breach of the code, but declined to comment further.

It is not the first time the Takeover Panel has been involved in this acrimonious takeover battle. It ruled in favour of Granada after Forte complained about comments relating to its profitability. And Forte's finance director, Keith Hamil, had to clarify remarks concerning references to Granada and the 1980s Guinness battle with Distillers.

Whitbread, whose hopes of buying Forte's restaurants business rest on Granada losing, will today outline to MAM why it should throw its weight behind Sir Rocco Forte.

Mr Power said: "Clearly, MAM is important. We think that if Mercury were to come with us it would be quite difficult for Granada to win. Clearly, if Mercury goes with Granada, it is very tight indeed."

MAM's role is so pivotal, that there was a suggestion yesterday that the institution may take the unusual step of issuing a statement to explain which way it voted and why.

However, a spokesman for Mercury said the fund had made no decision on a statement and would decide how to vote only after meeting Whitbread. Whitbread declined to comment on the meeting with MAM, which analysts believe will cast its vote with Granada.

There was also talk this weekend that Whitbread might even buy Forte shares to try to influence the outcome of the bid. But sources were playing down the idea, pointing out that the Forte share price would fall if Granada failed, leaving Whitbread holding a loss on its investment.

Forte believes it has the support of most private shareholders, who own about 15 per cent. On top of that is the Forte family's stake of about 8 per cent, and a number of smaller institutions have pledged support.

Granada holds a 9.99 per cent stake in Forte, and was this weekend said to be canvassing Forte's private shareholders by telephone. Forte said: "We have a number of employee shareholders who have been contacted."

Forte yesterday released further details of its sale of White Hart Hotels. The Regal Hotel Group has bought 67 of the 72 White Hart outlets for a total of pounds 122m, a deal that is conditional on the Granada bid failing. On completion, Forte will receive pounds 90m in cash and pounds 32m in 6 per cent redeemable, convertible preference shares in Regal Hotel Group.

But Gerry Robinson, Granada's chief executive, criticised doing such a deal so close to the bid deadline. "This is the type of transaction that will need careful scrutiny given the circumstances in which Forte negotiated this."

The remaining White Hart properties will be converted into Forte Posthouses, and one sold for office redevelopment. The pounds 2.2bn proceeds generated by this programme will be used to cut debt, return pounds 800m to shareholders through a share buy-back, and invest in hotels.