PRESS DIGEST – British business – July 9

The Times

NOT CONTENT WITH IBERIA MERGER, WALSH TO SEEK NEW DEALS

International Airlines (IACG), the umbrella company to be
formed upon the completion of the merger between British Airways
(BAY.L: ) and Iberia (IBLA.MC: ), will be structured to make further
acquisitions, according to BA’s chief executive. Willie Walsh
said that by the end of year, when the merger is completed, IACG
will act quickly to strengthen its position in Europe. Likely
targets could include Portugal’s TAP, Poland’s LOT or Finnair.
There is also the possibility of expansion into South America.
Walsh said: “We have created an entity capable of being scaled
up. Our ambition is truly global.”

GROCER’S ROLLERCOASTER RIDE

Shares in J Sainsbury (SBRY.L: ) fell by 6.75 pence early on
Thursday morning as the market reacted to the retailer’s chief
executive selling personal stock worth almost 1.6 million
pounds. Although Justin King still retains over 1.4 million
shares, the news that he had sold more than a quarter of his
stake prompted the reaction. Sainsbury’s had previously enjoyed
two days of rises amid speculation that its Qatari investors
were looking to increase their interest by bidding for the 76
percent that they do not already own. The retailer’s share price
recovered slightly by the end of Thursday, down nearly one
percent at 341 pence.

A NEW HIGH STREET BANK MAY RISE FROM THE ASHES

Sir David Walker and Lord Levene of Portsoken are setting up
an investment vehicle, to be listed on the junior AIM market, in
a bid to create a new retail bank using assets from state-backed
banks Lloyds Banking Group (LLOY.L: ) and Northern Rock (NRKx.L: ).
Levene and Walker plan to create a high street bank with up to
600 branches, which Levene would chair, with Walker being a
non-executive director. Lloyds needs to sell 600 of its own
branches, while Royal Bank of Scotland (RBS.L: ) must sell 318
branches, a matter it is currently discussing with Spanish bank
Santander (SAN.MC: ).

NEED TO KNOW: HAYS

Hays (HAYS.L: ), the FTSE 250 recruitment group, has announced
an increase in overall like-for-like sales of eight percent in
the three months to the end of June. The announcement marks
Hays’ first year-on-year growth in two years. The company also
said that demand from the financial services sector as well as
from pharmaceutical companies was keeping the UK labour market
stable, despite a reduction in activity in the public sector.

NEED TO KNOW: BABCOCK INTERNATIONAL

Babcock International (BAB.L: ), the engineering support
services company, has reported that its order book is “stable”
at an estimated 8.3 billion pounds since the year began. The
company hopes to utilise an opportunity for an increase in
outsourcing as the coalition government continues to address its
public spending deficit.

TEMPUS

Man Group (EMG.L: ) (sit on the sidelines until there is more
chance of an AHL recovery)

Probability (PBTY.L: ) (worth holding)

The Daily Telegraph

TESCO’S FASHION OFFERING TAKES WEST END TWIRL

Tesco (TSCO.L: ) plans to open a standalone clothing store in
London’s West End. The store will be branded F&F after its
own-label clothing range. The supermarket group’s clothing
division has annual sales of more than one billion pounds and,
according to Verdict Research, is ranked fifth in the 9.3
billion pound “value” clothing sector with a 10.4 percent market
share. Primark is the market leader with a share of 18.5
percent. Terry Green, Tesco consultant, said the store will be a
one-off to focus on the F&F brand and will complement the
group’s online and supermarket businesses.

JJB SEES WORLD CUP SALES BOOST

JJB Sports (JJB.L: ), the sportswear retailer, said
like-for-like sales during the period May 24 to July 4 increased
by 22.3 percent. The figures covering the six-week period of the
World Cup were in line with expectations despite England’s
premature exit from the tournament. Like-for-like sales in the
25 weeks to July 19, 2009 fell 26.6 percent. JJB’s “cumulative”
like-for-like sales from the beginning of the financial year on
February 1 to July 4 increased by 12.1 percent. Seymour Pierce,
the broker, said it still expected JJB to make “significant
losses” for the 2011/2012 financial year.

QUESTOR

Hays (HAYS.L: ) (hold)

Babcock International Group (BAB.L: ) (hold)

The Independent

CONNAUGHT’S TOP TEAM RESIGNS

Connaught (CNT.L: ), the social housing repairs group, has
seen its top management team resign two weeks after it issued a
profit warning that slashed a third off its shares. Mark
Tincknell, the chief executive, is set to step down due to
recent health issues while the finance director, Stephen Hill,
is set to step down at the end of October. The company has
stated that sales will be reduced by 80 million pounds and
earnings before interest, tax and amortisation by 13 million
pounds this year due to government spending cuts.

INVESTMENT COLUMN

Hays (HAYS.L: ) (hold)

Firstgroup (FGP.L: ) (buy)

Galliford Try (GFRD.L: ) (sell)

The Guardian

BP HOPES HAYWARD CAN SURVIVE AFTER BIG INVESTORS SHRUG OFF.

There is increasing optimism within BP (BP.L: ) that chief
executive Tony Hayward will be able to retain his position,
despite fallout in the United States over the Gulf oil spill.
Meetings between the oil major and its key investors have not
resulted in calls for Hayward to step down, although this could
change if investigations prove that the disaster was a direct
result of negligence. Despite losing half the value of their
investments, the general sentiment among shareholders is that
Hayward has mostly done a good job in facing down U.S. anger and
bolstering the company’s financial position.

Prepared for Reuters by Durrants

PRESS DIGEST – British business – July 9