De Vere Leisure has come under renewed pressure from a rebel shareholder to sell its hotels chain, including Brighton flagship The Grand.

Guinness Peat Group (GPG) has raised its offer for a 35 per cent stake in De Vere.

The investment group wants seats on the board so it can try to force the sale of De Vere's hotels division and return the proceeds to shareholders.

Now the activist, which currently owns ten per cent of the company, is upping its offer to buy a further 25 per cent from 415p to 430p a share.

GPG's revised offer is valued at £123 million and comes after only 0.13 per cent of De Vere shareholders accepted its original plea.

The group said it could make £550million from selling the upmarket De Vere brand hotels at a time when the entire company is only valued at £501million.

GPG argues De Vere's board has refused to give shareholders any indication of what the existing hotels division is worth by "side-stepping" the issue.

And it has accused De Vere of treating its shareholders "with disdain" by refusing to confront the issue of selling its 21 hotels.

De Vere board members believe GPG is trying to wrest control of the company on the cheap by opting against a full takeover bid.

They have pledged to use their 14 per cent stake in the company to oppose the offer.

Chairman Lord Daresbury branded the original offer as "derisory and inadequate".

Shareholders have also been warned they would lose the right to an interim dividend of 4.28p if they sold shares to GPG.

The board has described the offer from GPG as a distraction and said it was better to review its 21 hotels on a site-by-site basis.

In addition to its portfolio of hotels, De Vere runs 15 health and fitness clubs, trading as Greens, 14 village leisure clubs and distillers G&J Greenall.

Meanwhile, De Vere, which also owns the Belfry golf course, is preparing to make a bid for budget hotels chain Premier Lodge in a deal believed to be worth about £500 million.

De Vere originally sold the chain in 1999, along with thousands of pubs, for £1 billion.

Tuesday May 25, 2004