Prince Al Waleed leads race to buy Savoy hotels stake

JOHN SHEPHERD

Prince Al Waleed is rapidly emerging as the favoured candidate among the powerful Wontner family to buy the big stake in the Savoy group of hotels inherited by Granada from its pounds 3.9bn takeover of Forte. Shares in the Savoy have risen sharply in recent weeks to value the group at around pounds 400m.

"The Wontners are happy to do a deal with the prince at the right price," said a source close to the family last night.

He added that they were keen to sit down and talk because "there are indications from Prince Al Waleed that he is intent on retaining the present management at the Savoy and retaining the status quo with the family".

The Wontner family controls a crucial 48 per cent voting share of the Savoy, principally through four trusts set by the late Sir Hugh Wontner, the company's former chairman. Granada owns 68 per cent of Savoy's equity, but holds sway over only 42 per cent of the votes because of the company's two-tier share structure.

"Only a nutter will try to do a deal over the Savoy by talking to Granada before talking to other shareholders," the source said.

Forte spent 13 frustrating years trying to gain outright control, but every forceful move to secure ownership of the Savoy was firmly seen off by the Wontner family which found little difficulty in mustering support from other shareholders. No formal offer for the Savoy stake has yet been tabled, but any formal financial proposal is likely to come through the prince's representatives at the United Saudi Commercial Bank.

Questions about the future home of the Savoy shares was yesterday met with a firm "no comment" by a spokesman for Granada.

Alan Fort, finance director of the Savoy, also declined to comment on the situation. "When we have something to say we will issue a press release and then talk to you," he said.

While many people made a great deal of noise about how they would like to own the Savoy during the Granada takeover fight with Forte, sources in the City said yesterday that the firm list of potential buyers ran to no more than six names, most of which were American.

They include Ritz Carlton, the hotels company which is 49 per cent-owned by Marriott, and ITT Sheraton. However, a leading hotel industry analyst said that ITT had a "great deal on its plate" and would find it difficult to do a deal.

He added that Marriott would run the risk of "seriously damaging" its relationship with Whitbread, which last year paid pounds 180m cash for 16 Marriott hotels in the UK, by backing any move by Ritz Carlton.

The fabulously wealthy 38-year old Prince Al Waleed Bin Talal Bin Abdulaziz Al Saud is said to view an investment in the Savoy group as a natural extension of his 25 per cent holding in Four Seasons - the largest luxury hotels group in the world.

He bought his stake in Four Seasons last year for pounds 79m from Isadore Sharp, chairman and president, and simultaneously pledged almost pounds 50m of cash to help fund the hotel company's development. It is understood that the prince has been impressed by the new management team at the Savoy, which recently announced a sharp recovery in profits. Ramon Pajares - who was drafted in as managing director of the Savoy in late 1994 - spent 25 years working for Four Seasons.

The American-educated prince has swiftly established a reputation for ploughing hundreds of million of pounds into high profile businesses. Besides Four Seasons, these include a 24 per cent stake in Euro Disney, the Citicorp investment bank and Saks Fifth Avenue, the New York department store.

The Savoy group consists of some of the most highly prized hotels in London. Besides the Savoy hotel in the Strand, the company also owns Claridge's and the Berkeley.

Profits were severely underminded by the recession but the new management recently forecast a 165 per cent increase in pre-tax profits to around pounds 11.4m from continuing operations for the year just ended. Shareholders were also told that dividend payments would be doubled.