PRESS DIGEST – Financial Times – May 8

Saturday May 8 2010

Financial Times

HANDS FACES BIG TEST IN 105 MILLION POUND EMI CASH CALL VOTE

On Monday, buy-out house Terra Firma’s investors will vote
on whether to inject an extra 105 million pounds ($162.4
million) into EMI, the music group, to prevent it from falling
into the control of its lender Citigroup (C.N: ). The vote is seen
as a big test for Terra Firma’s chairman, Guy Hands. It could
also prove decisive for the future ownership of the group, whose
artists include Coldplay and Pink Floyd. Hands must secure
three-quarters of the votes cast by its investors to confirm the
extra funding.

VIRGIN MONEY OUT OF RBS AUCTION

Virgin Money, the banking arm of Sir Richard Branson’s
business, has been knocked out of the race to acquire the
318-strong branch portfolio being sold by Royal Bank of Scotland
(RBS.L: ). According to people familiar with the situation, Virgin
Money was contacted by RBS on Friday and told it would not be
going through to the final stages of the auction. Its defeat
comes after the group submitted a proposal that aimed to
preserve jobs and save branches rather than simply offer the
highest price.

CALVERT HIT BY CONFISCATION AND COSTS

Former Cazenove (CAZ.UL: ) partner Malcolm Calvert has been
ordered to pay 500,000 pounds after being found guilty of
insider trading offences. A judge ordered the fee to cover trial
costs and a confiscation order. Calvert was convicted on five
counts of insider dealing, relating to three stocks in March, in
a high profile victory for the Financial Services Authority. The
City regulator had previously been criticised for failing to
crack down on insider dealing.

INCHCAPE CHIEF GIVES UP TRANCHE OF SHARE OPTIONS

Andre Lacroix, chief executive of car retailer Inchcape
(INCH.L: ), has offloaded a tranche of share options after coming
under pressure because of a one-off incentive he was granted
last year. The move comes as some managers and companies rein in
executive pay awards in the face of criticism following the
financial crisis. Lacroix returned 7.56 million Inchcape share
options that he was granted in 2009. The car retailer’s shares
closed at 31.09 pence on Friday night.

BT PLANS EXPANSION OF SUPERFAST BROADBAND

BT (BT.L: ) is tipped to outline the expansion of its
superfast broadband network on Thursday when the
telecommunications giant unveils its full-year results. Chief
executive Ian Livingstone is likely to say that the group will
expand the planned reach of the network from 40 percent of homes
to 66 percent. It is expected that the proposal will increase
the cost of the infrastructure beyond the existing budget of 1.5
billion pounds.

ALLIANCE BOOTS, P&G SIGN DEAL ON EUROPEAN SKINCARE BUSINESS

An unusual tie-up will see Alliance Boots join Procter &
Gamble (PG.N: ), the largest consumer goods company in the world,
to help expand its nascent skincare business in Europe. P&G will
market and distribute the Alliance Boots’ Laboratories Serum 7
skincare range to pharmacies in Italy. The deal allows P&G’s
marketing and distribution facilities to support Alliance Boots’
products while the maker of Olay sells a more exclusive brand
through its established Italian network.

GILTS STEADY AS MARKETS FRET

Conservative leader David Cameron’s openness to a coalition
with the Liberal Democrats helped steady UK government bonds on
Friday. However, financial markets remain anxious about the
timetable for reducing the nation’s burgeoning deficit. Gilt
prices sold off sharply before Cameron’s announcement, amid
signals that investors no longer saw the UK as a haven from the
turbulence in Europe. Gilts eventually ended only slightly lower
on the day, although the FTSE 250 dropped 4.15 percent. The FTSE
100 fell 2.62 percent.

FACTORY GATE PRICES RISE 5.7 PERCENT

In the year to April, the price of goods leaving British
factory gates increased by 5.7 percent. The rise was greater
than expected and reinforced fears about price pressures.
According to the Office for National Statistics, the output
price index increased 1.4 percent between March and April. This
is against just a 0.7 percent rise in the same period last year.
“The rise in output prices suggested manufacturers were trying
to take advantage of recent improvements to push through some
price increases and support margins in the face of higher input
costs,” said Howard Archer, chief UK and European economist at
IHS Global Insight, a consultancy.

FURTHER INCREASE IN NEW CAR SALES

According to the Society of Motor Manufacturers and Traders,
new car sales increased in April 2010 for a tenth successive
month. Last month, a total of 148,793 new vehicles were
registered, representing an 11.5 percent increase on the same
month last year. Only eight percent of last month’s figure can
be traced to the government’s car-scrappage scheme, which has
now finished. SMMT has revised upwards its year-end total
registration figure for 2010 to 1.92 million.

ELECTION PROMPTS FLIGHT TO SAFETY

UK share investors are sticking to “big, boring” sectors of
the stock market, say bankers, as they avoid the volatility
created by a hung parliament and concerns over government debt.
Sectors likely to be hardest-hit by government spending cuts
fell on Friday, as both the Conservatives and Labour sought a
governing pact with the third-placed Liberal Democrats. Jeremy
Batstone-Carr, of stockbrokers Charles Stanley, said: “We have a
marked preference for companies regarded as more defensive.”
($1=.6465 Pound)

Stock Market Advice

PRESS DIGEST – Financial Times – May 8