PRESS DIGEST – British business – Sept 12

The Sunday Times

BETFAIR TAKES GAMBLE ON 1.5 BILLION POUNDS FLOAT

Online gambling group Betfair is expected to announce within
the next two weeks a 1.5 billion pounds floatation which is
likely to be one of the largest in Britain this year. The exact
price of shares is yet to be determined, but Japanese technology
investor Softbank paid 355 million pounds for a 23 percent stake
in 2003, from which the estimated value of 1.5 billion pounds is
derived. Founders Ed Wray and Andrew Black would be the largest
beneficiaries of the float; they own a combined stake of 25
percent of the company.

PHONES4U ON BLOCK

High street mobile phone retailer Phones4U may soon be sold
by its private equity owner, Providence Equity, after a number
of takeover offers were received for the chain. Analysts have
estimated the business to be worth between 700 and 800 million
pounds. Retailer Dixons, owned by DSGi (DSGI.L: ), has been
suggested as one possible buyer, as the two firms have recently
entered a tie-up agreement to host Phones4U kiosks in some of
Dixons’s retail outlets.

ITALIAN JOB FOR OLD MUTUAL

Financial services group Old Mutual (OML.L: ) (OML.L: ) is
conducting talks to buy an 80 percent stake in Fideuram Vita, an
Italian life assurance firm owned by Italian bank Intesa
Sanpaolo (UPIB.SJ: ). The acquisition would be the group’s first
since the financial crisis began. Old Mutual is already
partnered with Fideuram in selling its brand Skandia’s wealth
management products in Italy, and the purchase would improve its
chanced of expanding in the country. The talks come as Old
Mutual is finalising a deal to sell its South African bank
Nedbank to HSBC (HSBA.L: ) for four billion pounds.

VODAFONE TO DUMP FRENCH ASSETS

UK mobile phone network operator Vodafone (VOD.L: ) is making
preparations for the sale of its seven billion pounds stake in
French mobile phone group SFR. The move will come after chief
executive Vittorio Colao has put himself in charge of a new team
dedicated to controlling the company’s minority foreign
interests. Sources have claimed that Colao has decided to part
with the stake in the French firm, but is being careful not to
rush a decision to part with another of its significant
holdings, its 23 billion dollars stake in US network operator
Verizon N> (VZ.N: ).

The Sunday Telegraph

DIAMOND: CASINO CRITICS HAVE ‘NO BASIS IN REALITY’

The new chief executive of British bank Barclays (BARC.L: )
has responded to critics who have complained of his “casino
banking” by saying that the term “has no basis in reality”. He
said that many criticisms of investment banks reveal ignorance
about their operations. Diamond said that he strongly opposes a
move to split investment banking from retail banking, claiming
that Barclays’ model is the best for supporting UK economic
growth. He also warned the UK government against acting to
restrict remuneration at banks, arguing that it would push
financial firms to relocate abroad.

BAE CONSIDERS TWO BILLION DOLLARS SALE OF US ASSETS

Defence manufacturer BAE Systems (BAES.L: ) has put a portion
of its North American commercial aerospace business up for sale
for up to 2 billion dollars. The firm is also considering
restructuring plans to attempt to avoid being exposed to
upcoming government defence spending cuts. The business,
providing “platform solutions”, is thought to be worth about 200
million dollars in pre-tax profits every year. BAE’s advisors,
US banks JPMorgan (JPM.N: ) and Wells Fargo (WFC.N: ), are said to
be seeking initial offers this week, and may consider breaking
the business up if the price were be better.

RETAILERS WARN OF TOUGH YEAR AHEAD

High Street chains are predicting listless consumer spending
over the next few months, as an increase in VAT approaches and
the effect of public sector job cuts becomes evident. Financial
results and trading updates will come from retailers John Lewis,
Waitrose, Next (NXT.L: ), Debenhams (DEB.L: ), Kesa (KESA.L: ) and
Associated British Foods (ABF.L: ) in the next week. Next has
noted a “noticeable cooling in demand” amongst its customers,
whilst Debenhams has had to lure shoppers with a 25 percent-off
sale.

MELLON CONSIDERS BID FOR JIMMY CHOO

A collection of sovereign wealth funds, pension funds and
private individuals are thought to have promised to back the
fashion entrepreneur Tamara Mellon with 500 million pounds if
she decides to attempt to buy back the shoe business Jimmy Choo.
Mellon, who founded the brand in 1994, currently retains a 17
percent stake in the business, with the majority being owned by
the private equity house TowerBrook Capital. Towerbrook
announced last Friday that it had appointed Goldman Sachs (GS.N: )
and Morgan Stanley (MS.N: ) (Read more about the money market today. ) to “consider long-term strategic
alternatives” for the company.

QUESTOR

Hochschild Mining (HOC.L: ) (Buy)

Kenmare (KMR.L: ) (Buy)

Mail on Sunday

STANDARD LIFE BOSS’ PLEA ON NEST PENSION

David Nish, chief executive of the insurance company
Standard Life (SL.L: ), has defended the National Employment
Savings Trust scheme ahead of the government spending review.
Nest was designed by the last Labour government to make pensions
accessible to all employees, including the low-paid and frequent
job movers, and is currently scheduled to be introduced in 2012.
“I think there is a requirement for Nest to be there,” stated
Nish, “because you want to create an environment where everyone
can supplement their individual wealth”.

RIVALS VIE FOR CONNAUGHT PARTS

The remnants of the collapsed social housing company
Connaught (CNT.L: ), whose maintenance division was put into
administration last week, have attracted interest from more
fortunate contemporaries. The social housing division has
already been purchased by the construction firm Morgan Sindall
(MGNS.L: ) for 28 million pounds, whilst RPS Group (RPS.L: ), Mears
(MER.L: ) and Mitie (MTO.L: ) are all thought to be considering bids
for Connaught’s compliance and environmental divisions, which
are said to be worth up to 200 million pounds, and are
continuing to trade as normal.

KINGFISHER PROFITS HEAD FOR 20 PERCENT RISE

Profits have jumped by 20 percent at Kingfisher (KGF.L: ), the
owner of the B&Q DIY chain. The company reported profits of 340
million pounds for the twelve months to July. The strong results
are in contrast to the current poor fortunes of Home Retail
Group (HRG.L: ), the owner of the rival DIY chain Homebase. The
results of Home Retail released last week showed a failure to
increase its sales in the previous six months.

The Independent on Sunday

BP WELL THREATENS ANCIENT LIBYAN SITES

Archaeologists from around the world have warned that plans
by the energy company BP (BP.L: ) to sink a well off the coast of
Libya could have disastrous consequences for the region’s
ancient coastal city sites and shipwrecks, which are already on
threat from tourist developments, coastal erosion and oil
tankers. Work is due to begin on the well – which will be 200
metres deeper than the company’s Deepwater Horizon well in the
Gulf of Mexico – before the end of the year.

ITV PREPARES FOR BIG JOB CUTS AS NEW BROOM SWEEPS

The new bosses of broadcaster ITV (ITV.L: ), Archie Norman and
Adam Crozier, are said to be preparing massive job cuts as part
of a five-year master plan to turn the company around. Sources
close to ITV say up to half of the company’s 1,400 staff at its
South Bank Offices could go over the next few years, while
further cut backs are expected among the broadcaster’s 2,600
workers around the UK and Europe. ITV shares have risen by 58
pence since the new team’s rescue plan, but Norman warned
investors that it “will be a hard five year slog”.

The Observer

RYANAIR MUST MOVE AWAY FROM LOW FARES, SAYS O’LEARY

Michael O’Leary, chief executive of the airline Ryanair
(RYA.L: ), has warned that the low-cost carrier’s current average
fare of 40 euros is unsustainable and it will have to move away
from its current “pile it high and sell it cheap approach”.
O’Leary said that the airline will have to become a more
sophisticated operation as the business reaches maturity, with
an increased focus on levels of service. The airline is facing
pressure on costs as it moves into major airports closer to the
city centre in its quest for more passengers.

TULLETT’S SMITH TO LAUNCH OWN FUND MANAGER

Terry Smith, chief executive of the money broker Tullet
Prebon and deputy chairman of the stockbroking and advisory firm
Collins Stewart (CLST.L: ), has drawn-up plans to launch a fund
management company and is seeking cash from private and
professional investors. Smith is currently awaiting approval for
venture – to be called Fundsmith – from the Financial Services
Authority and declined to reveal any further details. However,
Smith’s spokesman said that Fundsmith would launch “within a few
months”.

PRESS DIGEST – British business – Sept 12