Greenalls plays down takeover talk

Greenalls is playing down mounting City speculation that it is ripe for a takeover following the sale of its pubs and restaurants to Scottish & Newcastle.

The £1.14b sale was completed last week and analysts believe Greenalls, which owns the Village Leisure and De Vere hotel chains, could be the next target for consolidation in the hotel industry.

This follows Whitbread's £578m takeover of Swallow last month, which was seen as leaving Greenalls out in the cold.

Swallow and Greenalls had been in merger talks for some months prior to Whitbread's sudden move.

Stephen Broome, hospitality and leisure specialist at PricewaterhouseCoopers, saw the slimmed-down Greenalls as "an obvious target", with Whitbread or Granada the most likely suitors.

Other observers are convinced Greenalls is still looking for a "strategic partner".

But Paul Dermody, managing director of Greenalls hotels and leisure, pointed out that the group is investing £80m this financial year in expanding and improving its hotels and fitness clubs.

"Greenalls has been seen as a likely takeover target for the last 30 years," he added.

There were no talks with potential buyers, only with independent hoteliers eager to join its De Vere Associates sales and marketing scheme. This now has 10 members.

Dermody said he was also considering Edinburgh's Caledonian hotel as a potential addition to the current 17 De Vere properties.