Granada Group Wins Control of Forte
Granada Group won its $5.9-billion hostile takeover battle for Forte and will soon be putting on the world’s largest hotel sale.
Granada will put more than half of Forte’s up-market assets up for grabs in a $3.15-billion sale. Included will be the Meridien and Exclusive chains and Forte’s roadside service stations, Granada Chief Executive Gerry Robinson said. Granada will also implement a $150-million cost-cutting program, he said.
Granada said Tuesday that it controls 66.68% of Britain’s largest hotelier and is still counting acceptances. The British leisure company won the votes of more than 647 million shares and the support of Forte’s largest shareholder, Mercury Asset Management.
Granada’s victory concludes a nine-week fight. Granada is seeking to boost its leisure operations , which include Britain’s third-largest contract caterer. Forte is the company’s fourth major acquisition during the five years Robinson has led the company.
Mercury Asset Management, Britain’s biggest fund manager, clinched the victory for Granada when it agreed to sell its 14.1% stake in Forte ahead of the close of the bid. Mercury, the largest shareholder in both Granada and Forte, was seen as vital to victory for either side.
The battle’s outcome was a huge blow to Rocco Forte, who four years ago inherited control of the hotel and restaurant empire. The business got its start in the 1930s as a single small London eatery run by his father, an Italian immigrant.
After Mercury Asset Management officials met with Rocco Forte on Tuesday morning to say they would sell, Forte toured the headquarters, thanking employees for their years of work.
Most fund managers said they accepted Granada’s offer because they were skeptical of Forte’s ability to generate sufficient profit following the proposals laid out in its defense.
“We supported Granada,” said Graham Wood, head of British asset management at British insurer Standard Life. “I found that Granada’s management could produce better returns on the assets than Forte’s could.”
Late last week, Rocco Forte borrowed heavily to buy Forte stock in the hope of keeping the company out of the hostile suitor’s hands.
Forte had sought to keep shareholders loyal by promising a big stock buyback, higher dividends and a better future with a company that would focus solely on hotels.
Forte accused Granada of plotting to strip the company of its assets and tried in vain to ward off the takeover by selling its restaurants, hotels and other businesses, including its North American Travelodge hotel chain. Forte had also proposed selling its British Travelodge chain and distributing its 68% stake in luxury hotelier Savoy among shareholders.
Granada, a leisure and television company, had initially bid about $4.95 billion. It later raised the price with a special dividend of 71 cents per share. Granada moved in for the kill last week, staging a raid on Forte shares that eventually gave it 9.98% of the company.
