Savoy directors poised for share shake-up

JOHN SHEPHERD

Directors of the Savoy group of hotels, which is caught in the middle of the pounds 3.3bn hostile bid battle between Granada and Forte, are expected to meet early in the new year to consider radically changing its controversial, and antiquated two-tier share structure.

It is understood that some of the directors of the Savoy group have privately accepted that the share structure needs to change.

Any changes that enfranchise the share would virtually guarantee a sharp rise in the value of Forte's stake in the Savoy.

The Savoy group yesterday declined to comment.

A City source said that the share structure would have to be changed, regardless of whether Forte remains independent. Forte has pledged to dispose of its Savoy shares either through a sale, or via a distribution to its shareholders. Granada has also said the Savoy shares would be sold if it wins control of Forte.

At the moment the 'B' shares, which are largely owned by the Wontner family trusts, have 20 times the voting power of each 'A' share.

This unbalanced ratio of votes has kept the acquisitive aspirations of the Forte hotels group at bay for more than a decade. Forte owns 68 per cent of the total shares in issue, but only controls 42 per cent of the votes.

The source said, however, that existing holders of Savoy shares would resist having their voting power diluted too much. "Enfranchisement, however, on the basis of giving around seven 'A' shares for each 'B' shares might be acceptable to most family members," he said.

The problem facing the Savoy once the bid is over is how to ensure an orderly, and stable market in its shares. Unless the voting balance of the two-tier voting structure is addressed, it is unlikely that City institutions would be willing buyers of any Savoy stock that may be sold.

Meanwhile, Forte yesterday suffered a setback to sell its chain of white Hart hotels. Apax Partners, the venture capital group, yesterday pulled out of talks to back a pounds 100m purchase of the hotels by Oriel, a private leisure company. Forte said, however, that talks with Oriel were continuing.