Weekend City Press Review Issue #968 (28 August - 29 August 2010)

WCPR Viewpoint

Last orders?

 


Those returning to work this week after their summer holidays may be a trifle bemused by the news in their papers and on radio & television. Is the economy getting better or are we on the cusp of another dip into recession?

 


The figures, as ever, are confusing: UK growth in the second quarter was revised upwards last week (albeit by a fraction) while GDP in the US in the same three months was scaled back sharply. Yet German growth enjoyed its fastest pace since unification.
And while stock markets have a bad case of the jitters at present, seemingly lost about which way to turn, corporate activity is powering ahead with record summertime M&A deals and a number of major cash-calls on the way.

 


Even central bankers enjoying their end-of-August retreat at Jackson Hole in Wyoming (although, as usual, not Mervyn King) appear at sixes and sevens over whether the US, UK, eurozone and global economies are really facing a slide back into recession.
What is going on? The answer, of course, depends on whether you are a glass half-full or a glass half-empty sort of person - and central bankers, highly-paid financiers and Cabinet ministers are as prone to this syndrome as the rest of us.

 


Much of the media, of course, prefers the doom-and-gloom outlook of events (it makes for a better story) while those holding the levers of power tend to be on the optimistic, glass half-full side. The coalition government obviously has a bit of a problem with this, since it is trying to be serious about the need for spending cuts while at the same time not 'frightening the horses', as they say.
In fact, there is always the possibility we are actually drinking in the 'Last Chance Saloon' for the economy, so it is probably best to just keep filling the glasses up... - David Churchill

Saturday

Financial Times

Fed ready to boost US economy

Federal Reserve chairman Ben Bernanke made clear at the annual Jackson Hole meeting of central bankers that he would use all available tools, including holding more Treasury bonds and other long-term securities, to boost the flagging US economy. His comments came as revised US growth figures for Q2 showed GDP on an annualised basis down from 2.4% to 1.2%, a contrast to the UK where Q2 growth was revised upwards from 1.1% to 1.2%. For Bernanke, the stakes he now faces over US recovery are higher than at any time since the financial crisis was at its peak. But, in an editorial, the FT suggests there may be little Bernanke can do 'beyond not rocking the boat'.

[ pp.1, 3, 5, 9, 8 ]

BBC's director-general rounds on Murdoch over corporation's viability

BBC director-general Mark Thompson has launched an attack on BSkyB chairman James Murdoch and his father Rupert, who he claimed were among the 'commercial and political forces' seeking to undermine the BBC's independence. Thompson's comments, in a speech at the Edinburgh television festival, were a delayed response to James Murdoch's own criticisms of the BBC at the same event last year. Thompson also said News Corporation's plan to acquire the near-61% of BSkyB it did not own would create a concentration of cross-media ownership not allowed in either the US or Australia.

[ p.1 ]

RIM refuses to back down in India

Research in Motion has rejected latest Indian government demands for access to Blackberry e-mails and messaging services, claiming it did not have the encryption codes as these were generated by its corporate clients. India has set a Tuesday deadline for the country's mobile operators to shut down Blackberry's messaging services unless the codes are given to its security agencies.

[ p.4 ]

Dana buys more time against KNOC bid

Dana Petroleum delayed launching its defence against the £1.87bn hostile bid from Korean National Oil Corporation when it unveiled interim pre-tax profits on Friday of £82m. Dana had been expected to disclose a £240m deal to buy North Sea assets from Canada's Suncor but only said it would release a detailed response to the KNOC bid on 8 September.

[ p.13 ]

Lex

...thinks that many economists and investors are privately fretting that a new crisis is on the way, or even that the last one never really ended.

...Releasing money in circulation but not used, such as unwanted store gift cards and dormant bank accounts, would give a timely stimulus to the US economy, although cashing in all these sources of 'free money' at the same time would also lead to trouble.

...Tales of mammoth traffic jams in China are a reminder that the country's infrastructure is still struggling to keep pace with rapid economic growth.

...Experience in the US and other developed nations suggests that technology has undoubtedly made more people richer over the past century, although this extra wealth this has not reduced the numbers in work as once seem likely.

[ p.22 ]

The Long View

...James Mackintosh says investors are starting to realise that under-performing hedge funds probably reflect the fact that many are little more than just overpriced mutual funds, with the top performers achieving their success through uncorrelated efforts ranging from expensive lawsuits to exotic derivatives.

[ p.22 ]

In the Loop

...Mark Kleinman thinks HSBC chairman Stephen Green is likely to become the latest business leader to turn down the offer of filling the vacant Trade Minister's job in the coalition government.

...Connaught's beleaguered chairman Sir Roy Gardner has rejected an approach from Centrica to buy back the GasForce business Gardner sold to Connaught in 2002 when he was Centrica CEO.

...TNK-BP has appointed Credit Suisse to advise on a possible bid for BP's interests in Vietnam and Venezuela.

[ p.13 ]

Briefs

National News: Asil Nadir faces claims from personal creditors for up to £375m following his return to the UK from northern Cyprus. ● Thailand's biggest steel producer Sahaviriya Steel Industries is planning to buy Corus's mothballed Teeside steelmaking plant for £320m. ● World News: Germany's powerful IG Metall trade union is seeking a 6% pay deal for 85,000 steel workers. ● UK Company News: Southern Cross Healthcare, whose shares closed Friday 56% ahead at 28.5p, has rejected an approach from TowerBrook Capital and is refusing further talks with the private equity firm. ● Kazakhmys is investing US$130m in building a national library for Kazakhstan. ● Tullow Oil may have lost a key licence at its Lake Albert project in Uganda as a result of a tax dispute with the government. ● The Wagamama restaurant chain, which owner Lion Capital is believed to have put up for sale, is planning significant expansion in the US over the next three years. ● Rightmove said the lack of first-time buyers able to join the property ladder was putting pressure on an already fragile housing market. ● Life assurer Phoenix Group is seeking to persuade its lenders to agree an increase in dividends as a result of strong cash generation. ● Evolution CEO Alex Snow has admitted that cost-cutting is necessary among brokers because of the difficult conditions facing the investment banking sector. ● Serviced office provider Regus claims the worst is over for its UK business in spite of a squeeze on margins pushing it into an interim loss. ● SVG Capital reported investment gains in the first half as a result of recovery at Permira, where it is the private equity firm's biggest shareholder. ● Marshalls revealed a near-doubling of interim profits to £7.5m in spite of a weather-affected start to its financial year. ● Aegis Group has signalled a return to dealmaking after posting interims up from £22.5m to £41.5m. ● International Company News: Boeing has blamed Rolls-Royce, down 0.6% to 555.5p, for further delays to its new 787 Dreamliner aircraft. ● The US Department for Justice has opened an extended inquiry into Google's planned acquisition of online travel service ITA Software. ● Microsoft co-founder Paul Allen's Interval Licensing company has launched a wide-ranging patent case in the US courts against leading technology groups, including Google, Apple and Facebook. ● The US Depository Trust & Clearing Corporation is in early-stage talks to take a stake in the European Multilateral Clearing Facility that handles most European equity trades. ● Oil tanker operator Frontline warned of a glut in new ships being delivered over the next two years which could hit tanker rates. ● US regulators have approved the merger between Continental Airlines and United Airlines. ● Intel warned of a global slowdown in demand for computers, raising fears of a potential double-dip recession. ● Hewlett-Packard has again raised its offer for data storage business 3Par to US$30 a share to trump the latest bid from Dell. ● Chinese computer games company Lenovo is to launch its own games console in November to challenge Sony, Nintendo and Microsoft. ● Market News: Aggreko rose 3% to £14.37 after Morgan Stanley upgraded it to 'overweight', arguing it could afford to return 150p a share to investors without harming growth. ● Rockhopper Exploration gained 2.3% to 319p ahead of an update early this week from its Sea Lion well off the Falklands. ● On London: Neil Hume says investors face a dilemma over whether the divergence in bond yields and equity prices, ending a relationship that has lasted for most of the past decade, means they should now bail out of shares.

[ pp.2, 6, 10, 11, 12, 13, 14, 15, 20, 21 ]

The Times

Comment

...Patrick Hosking says Rightmove has proved an online winner in spite of a shaky start when it floated in 2006.

...Fears of a double dip recession on both sides of the Atlantic look overdone.

...Boeing's public castigation of Rolls-Royce over its engine problems does not bode well for their future relationship.

...The Pensions Regulator is being asked to adjudicate on the size of the pension fund deficit at EMI, the first time it has been asked to make such a decision.

[ p.51 ]

Briefs

A 'catastrophic failure' of a new Trent 1000 engine being tested by Rolls-Royce at its Derby facility is believed to be the reason for Boeing blaming Rolls for further delays to the 787 Dreamliner project, although Rolls denies this. ● Construction analyst Glenigan claims that Tesco has increased its pipeline of new stores and now accounts for 59% of planned UK supermarkets. ● US reports suggest the Blockbuster DVD retail chain is poised to file for bankruptcy. ● Stephen Lansdown has resigned as an executive director of Hargreaves Lansdown, ahead of Wednesday's financial results which will also see co-founder Peter Hargreaves step down as CEO. ● Major energy companies are seeking government protection in the event of a failure of proposed North Sea carbon capture and storage projects which could pollute the sea. ● Korean National Oil Corporation has again said it will not raise its £1.87bn bid for Dana Petroleum. ● Gordon Ramsey's US restaurant operation, Gordon Ramsay Holdings International, lost £8.32m for the year to end August 2009. ● Independent News & Media, former owner of the Independent newspapers, reported interim sales up 8% to Eu656.5m. ● Scottish investors are putting £10m into the Airdrie Savings Bank to fund expansion. ● John Graham, founder of the Go Outdoors clothing and equipment retailer, says he has no plans to float just yet although 'definitely will one day'. ● Balfour Beatty has secured a construction contract for new schools in Stevenage. ● Tasty, the company behind the Dim T chain of oriental restaurants, is said to be negotiating to buy two sites from Paramount Restaurants. ● Market News: Tullow Oil fell 48p to £12.11 because of concerns it had lost one of its licences in Uganda following a dispute with the government.

[ pp.50, 54, 55, 56, 57, 58, 61 ]

The Daily Telegraph

Comment

...Alistair Osborne thinks Tullow Oil may have to accept that Heritage Oil CEO Tony Buckingham has proved more clever and ruthless in getting out of Uganda without paying a disputed tax bill.

...If Korean National Oil Corporation holds its nerve it is likely to get Dana Petroleum for the £18 it has offered, whatever Dana CEO Tom Cross may say or do.

...Aga Rangemaster's return to profits is almost entirely due to a £16.3m accounting gain from freezing pensionable pay rather than improved trading.

[ p.35 ]

Briefs

Heritage Oil is alleged to have failed to pay a US$283m tax bill on the sale of its Ugandan assets to Tullow Oil, leading to the government taking back control of a key oilfield. ● Royal Bank of Scotland has decided after nine years to end its sponsorship of the Open golf championship. ● Aga Rangemaster is to resume dividend payments after posting interim profits of £16.4m against a loss of £2.4m at the same stage last year. ● Iberia reported first-half revenues up 3% to Eu2.2bn as well as reduced net losses from Eu165m to Eu21m. ● D1 Oils CEO Ben Good has resigned after the collapse of takeover talks with Australia's Mission NewEnergy. ● Independent News & Media lost £13.6m from the sale earlier this year of the Independent titles to Alexander Lebedev for just £1. ● Phoenix Group is in the hunt for acquisitions after revealing improved interim profits. ● Market News: Marks and Spencer rose 6p to 346.5p following upbeat comment from Nomura.

[ pp.33, 34, 35, 32 ]

The Independent

US Outlook

...Stephen Foley says the irrational bidding war between Hewlett-Packard and Dell for loss-making 3Par is a sign that both sets of directors have let the 'clash of the tech titans' rhetoric go to their heads.

...The US Supreme Court or even Congress may now have to decide whether the Federal Reserve should be able to keep secret the details of which banks applied for government support during the financial crisis.

...Doubts remain on both sides of the Atlantic over whether quantitative easing really helps the economy.

[ p.55 ]

Briefs

Intel warned its Q3 revenues could fall short of targets because of weaker-than-expected global demand for personal computers. ● Spyker reported interim net losses up from Eu8.7m to Eu139m following the acquisition of the Saab car business from General Motors earlier this year. ● High profile Scottish business people, including Stagecoach's Brian Souter and sister Ann Gloag, are backing expansion of a small Scottish financial institution, the 175-year old Airdrie Savings Bank. ● Market News: Wellstream rose 28p to close at 533.5p on speculation of a possible bid, although UBS also raised its stance from sell to neutral.

[ pp.56, 57, 58 ]

The Guardian

Briefs

Economists warned that the strong Q2 growth in GDP, revised up to 1.2%, was unlikely to continue for the rest of the year. ● Rightmove reported record numbers of househunters using its website in spite of uncertainty in the housing market. ● Music festivals have become an important part of the UK entertainment industry, contributing £450m a year to the economy from more than 670 events. ● Market News: Meggitt lost 5.5p to 261.5p in the wake of Boeing announcing more delays to the 787 Dreamliner programme.

[ pp.36, 37, 39, 38 ]

The Daily Mail

Comment

...Ben Laurance thinks the economic outlook is more challenging than the Q2 growth figure of 1.2% suggests, which could see the coalition government's nerve tested over its commitment to public spending cuts.

[ p.105 ]

Briefs

Lion Capital has been approached by restructuring specialists Hilco and GA Asset Advisors over acquiring parts or all of the UK arm of struggling American Apparel. ● The European Medicines Agency is to investigate whether GlaxoSmithKline's Pandemrix swine flu vaccine may cause narcolepsy. ● Troubled Connaught is reportedly struggling to save a key contract with Norwich City Council. ● Market News: Mitchells & Butlers added 4p to 290.5p after chairman John Lovering bought 50,000 shares.

[ pp.104,106 ]

Daily Express

Comment

...Andrew Johnson thinks even the fact that Ben Bernanke was forced to promise fresh stimulus measures if necessary is a cause for concern.

...The possible move by Thailand's Sahaviriya Steel Industries to restart steelmaking on Teeside shows just how the global economic power is shifting.

...Aga Rangemaster's iconic ovens are becoming increasingly popular in France, it has emerged.

[ p.71 ]

Briefs

D1 Oils chief operating officer Martin Jarvis is to replace Ben Good as CEO after he resigned in the wake of activist investor Brian Myerson blocking the takeover attempt by Mission NewEnergy. ● Week of Dealings: Director buying was seen at Anglo American and Mitchells & Butlers. ● Market News: Tui Travel rose 2p to 201p and Thomas Cook 2.5p to 184p on suggestions they could benefit from a late-summer bookings surge.

[ pp.71, 74 ]

Sunday

The Sunday Times

Buffett emerges as surprise bidder for Direct Line

Warren Buffett's Berkshire Hathaway is among the potential bidders for Royal Bank of Scotland's Direct Line insurance business which the bank is being forced by the EC to sell following its government bailout. RBS had been considering a float of Direct Line in 2012 but heavy losses from its car claims division has made a sale more likely, especially given the level of interest.

[ p.3.1 ]

Vodafone in £4bn Chinese sell-off

Vodafone is planning to raise more than £4bn from the sale of its stake in China Mobile as part of planned asset sales. A deal could be announced next month ahead of Vodafone's strategic update due in November, although the board has yet to decide whether to find a strategic investor to take on the stake or place it on the Hong Kong stock exchange where China Mobile is listed.

[ p.3.1 ]

Hayward tipped for top job

BP's institutional shareholders are reportedly seeking to resurrect the career of the oil major's outgoing CEO Tony Hayward by paving the way for him to take on another senior role as either CEO or chairman at a large mining or engineering group. The investors think Hayward was unfairly made the scapegoat for the Gulf of Mexico disaster and, at 53, has another major job left in his career. Meanwhile, BP's Gulf of Mexico partner Transocean faces increased scrutiny over its role in the oil leak at the Deepwater Horizon well.

[ pp.3.1, 3.7 ]

Growth needs support

Bank of England deputy governor Charlie Bean has warned that further government support for the economy may be needed to ensure the recovery continues. His comments, at the annual Jackson Hole meeting of central bankers in the US, comes as revised forecasts from BNP Paribas and the British Chambers of Commerce suggests UK growth will be ahead of expectations, although the threat of a double-dip recession is still a worry for the markets and business.

[ pp.3.1, 3.5 ]

Top fund managers sue Numis over failed float

Numis Securities is facing a US$95m compensation claim from Fidelity and London-based hedge fund CQS over allegations that Numis made 'fraudulent misrepresentations' during a US$150m fundraising for Canadian oil company Rock Well Petroleum in 2007. At about the same time Omega Oil of the US launched a legal claim that Rock Well had infringed its patents, although it is claimed there was no mention of this in the fundraising memorandum. Numis says the claim is spurious and will be defended 'robustly'.

[ p.3.3 ]

Chelsea hedgies share £31m bonus

A bonus pot of £31.3m has been shared by two London hedge fund managers after their Bluegold fund, set up in early 2008, successfully took advantage of oil market volatility over the past two years. Pierre Andurand and Dennis Crema were previous senior traders at oil trading giant Vitol.

[ p.3.3 ]

Agenda

...Dominic O'Connell says the Serious Fraud Office should resist taking the easy option of 'doing a deal' with Asil Nadir and press charges against him.

...Bumper interim profits from Agricultural Bank of China reflect the Chinese government's demands last year to pump extra money into the economy to fuel growth, a move which could lead to waves of bad debts for the banks over the next few years.

...The surprise decision by Royal London CEO Mike Yardley to step down in the middle of a rescue takeover of rival Royal Liver shows just how out of touch the 'world of mutuals' has become in contrast to the cut and thrust of real financial markets.

...Part of the delay for Boeing's Dreamliner project has been its attempt to cut costs by farming out production around the world, emphasising that globalisation of such complex programmes only works if tight control is maintained.

...Outgoing Corus CEO Kirby Adams deserves some praise for finding a rescue deal for the mothballed Teesside steel plant, especially given the vilification he received when he announced the shut-down last year.

[ p.3.4 ]

Economic Outlook

...Peter Spencer, economic adviser to the Ernst & Young Item Club, thinks that if the government comes anywhere near achieving its aim of eliminating the budget deficit in the current Parliament, then it will mean interest rates will probably stay lower for longer than the market expects.

[ p.3.4 ]

American Account

...Irwin Stelzer says uncertainty at the Federal Reserve about what to do to keep the recovery on track means it is little surprise that investors have headed for the perceived safety of US Treasury bonds in spite of their low yields.

[ p.3.4 ]

Business features

...James Ashton reveals how the Oxford University Press has become the most successful university publishing house in the world, making a £99m profit last year and contributing £67m to the university's funds.

...Sean O'Driscoll in New York reports on the continuing courtroom battle over claims by the Lehman Brothers estate, trustees and creditors that Barclays Bank was able to buy the assets too cheaply because of alleged collusion with Lehman executives.

...Matthew Goodman says that food sales are now more important than drink revenues in many pubs as a result of changing consumer habits.

...Iain Dey suggests that HSBC's move to take a controlling stake in South Africa's Nedbank is part of its developing strategy to become a truly global player.

...Kate Walsh reveals that J Sainsbury CEO Justin King is already coming under pressure to justify the £20m sponsorship - its biggest-ever such deal - of the 2012 London Paralympics.

[ pp.3.1, 3.6, 3.7, 3.12 ]

Briefs

Treasury chief secretary Danny Alexander has ruled out any reduction in the overall tax take for the next five years. ● Louis Bacon, head of Moore Europe Capital Management, donated £250,000 to the Conservative Party in two separate gifts this year, it has emerged. ● Former Qinetiq CEO Graham Love has been appointed chairman of LGC, a forensic investigations company that was bought out earlier this year for £257m in a deal backed by Bridgepoint Capital. ● Encore Oil is expected to reveal this week another major oil discovery in the North Sea off the Shetland islands, with an estimated 100m to 200m barrels of oil potentially available. ● Royal Dutch Shell is this week due to start the auction of some of its Nigerian assets. ● Supermarket chains are cutting bread prices as a promotional tactic in spite of the surge in the cost of wheat. ● The Serious Fraud Office is likely to reduce by about half the 66 charges that were facing Asil Nadir when he fled the UK 17 years ago. ● First Quantum Minerals has suspended operations at the Frontier copper mine in the Congo after government troops seized control in a licence dispute. ● Sir Terence Conran's design group Conran & Partners made a profit of £252,000 in the year to March against a loss of £369,000 in the previous year. ● Virgin Active has reportedly shelved plans for a £1bn float. ● Ed Bramsom's Sherborne Investors has raised its stake in F&C Asset Management to about 14%. ● Diageo may back a ban on low-cost sales of alcohol. ● The Ugandan government has ordered Tullow Oil to stop work on the second of its three exploration projects in the country in an escalating dispute over taxes allegedly due. ● Furniture retailer Dwell has sold a minority stake for £5m to Key Capital Partners to help fund expansion. ● Everything Everywhere, parent company of Orange and T-Mobile in the UK, is threatening legal action in a dispute over the government's £5bn auction of new wireless spectrum.

[ pp.1.7, 3.1, 3.2, 3.3 ]

The Observer

Treasury in stark new warning over taxes

Treasury chief secretary Danny Alexander, responsible for agreeing the public spending cuts with Whitehall departments, has warned in an interview with the Observer there that there will be no reduction in the overall tax burden for at least five years. His comments will dismay Tories in the coalition government who believe tax cuts would help secure a majority at the next general election. Meanwhile, the funding of a new Trident nuclear deterrent out of the MoD's budget could see several Army regiments disbanded, including the Gurkhas.

[ pp.1, 8-9 ]

Comment

...Ruth Sunderland, in her final column as Business Editor, thinks that in spite of the difficulties in reconstructing the evidence against Asil Nadir, it is important for the creditors of collapsed Polly Peck that the Serious Fraud Office passes ahead with charges.

...Public relations people are likely to get little sympathy over their belief they are being unfairly stigmatised by the government as being a prime target for Whitehall cuts.

[ p.39 ]

In My View

...Jon Davis, a history lecturer at the University of London, believes the Treasury is now back on the front-foot after its reputation and confidence 'went to the wall' during the recession and financial crisis.

[ p.39 ]

Media

...Peter Preston says that while the BBC continues to fight its many opponents on several fronts, the real solution to its problems is that it needs to break free from the shackles of the licence fee.

[ p.40 ]

Briefs

Vedanta Resources is to lose a British Safety Council award for failing to disclose a chimney collapse at one of its Indian plants which killed 40 workers last year. ● Bank of England deputy governor Charlie Bean suggested in speech at the Jackson Hole meeting of central bankers that a future financial crisis could not prevented if the authorities were forced to use interest rates alone. ● Eaga has emerged in top place in the latest listing of ecologically sustainable companies produced by the Observer and Co-operative Asset Management.

[ p.35 ]

The Sunday Telegraph

Major companies move to end bank break-up plan

Leading British companies are to urge the government to scrap plans to break up the banks, arguing that it would make banking facilities more expensive and less efficient. The companies, who are not named, are said to be planning to use a CBI consultation process on the issue to coordinate their campaign.

[ p.B1 ]

Kirsh suggests Minerva split in boardroom war with executives

Nathan Kirsch has told the Sunday Telegraph he believes Minerva should be split into two with half the property group turned into a real estate investment trust. Activist investor Kirsh, whose KiFin investment vehicle owns 29.5% of Minerva, is seeking to replace the chairman and CEO at an EGM on 8 September, although Minerva claims this is a takeover bid by default.

[ pp.B1, B7 ]

Comment

...Kamal Ahmed says Vince Cable's trade trip to Brazil this week, along with the heads of several major companies, highlights the potential importance of South America as a key export market just as much as China and India.

...George Osborne should appoint Robert Chote, director of the Institute of Fiscal Studies, as new head of the Office for Budget Responsibility in spite of the IFS's criticisms of the emergency Budget in a report last week.

[ p.B4 ]

Economic Agenda

...Liam Halligan, chief economist at Prosperity Capital Management, thinks the US authorities are well aware that global investors cannot afford to dump US Treasuries without harming themselves, so the Administration can continue to bang the drum of 'ever looser money and more profligate government'. But UK and eurozone government bonds do not enjoy the same protection.

[ p.B4 ]

The Markets

...David Buik, an analyst at BGC Partners, believes greater transparency by the banks and sensitivity towards the needs of their clients would go a long way to improving their reputation with the public.

[ p.B4 ]

Briefs

Diageo has told the Home Office review of licensing laws that it would consider supporting an end to low-cost drink sales even though it denies any link between price and alcohol abuse. ● Charlie Bean, the Bank of England deputy governor, says the Bank was committed to an aggressive use of new powers to head off any future financial crisis. ● Entertainment entrepreneur Joel Cadbury has bought a chain of four pubs for £4m from Orchid Group. ● BP has spent US$1m a week on television and radio advertising in the US since the Gulf of Mexico spillage in April. ● Channel 4 is poised to offer BBC One controller Jay Hunt the position of chief creative officer; meanwhile, the government may force the BBC to allow the National Audit Office to scrutinise its accounts. ● The board of 3Par has called Hewlett-Packard's offer of US$30 a share a 'superior proposal' to Dell's last bid. ● Former Northern Rock chairman Matt Ridley says his time at the bank was a 'catastrophic black mark' on his CV. ● The New City Initiative is a proposal by leading fund mangers to introduce new standards of disclosure in the City. ● JP Morgan Asset Management is set to appoint Mike O'Brien, former head of BlackRock's European arm, to run its global institutional franchise from London. ● DSG International is set to report this week a 3.5% increase in like-for-like sales in its UK stores. ● Social investment bank Social Finance, founded by Sir Ronald Cohen, is to get £10m in public funds to help with measures to prevent released prisoners from re-offending. ● Swedish retailer Clas Ohlson is planning to expand to 200 outlets in the UK. ● Heritage Oil is targeting Iraq after its controversial withdrawal from Uganda.

[ pp.B1, B2, B3, B5 ]

The Independent on Sunday

Malaysian workers' savings fund launches £1bn spending spree

Malaysia's US$112bn Employee Provident Fund has hired ING Real Estate Investment Management and RREEF, the property fund management arm of Deutsche Bank, to establish a £1bn European property portfolio. It has allocated each £500m of equity for acquisitions, part of a wider strategy to diversify its asset base outside Malaysia.

[ p.77 ]

Comment

...Mark Leftly thinks there are plenty of reasons to be cheerful about the economy and outlook for the City, in spite of fears for the stock market and a possible double-dip recession.

...BP chairman Carl-Henric Svanberg should back former BHP Billiton CEO Charles 'Chip' Goodyear as one of two new non-executive directors, even if it leads to speculation that he is in line to replace him as chairman.

...British businesses risk losing out from the 'golden opportunity' of the 2012 London Olympics unless the games are better promoted at home as well as abroad.

[ p.83 ]

Economic View

...Hamish McRae believes that once the global recovery is secure - which it will be in the next 18 months - the next big threat to world financial stability will be the high debt mountain.

...While the domestic tourism industry appears to have had a good summer, much will depend next year on the exchange rate as a rising pound will make the UK less attractive to overseas visitors while at the same time encouraging more Britons to holiday abroad.

[ p.82 ]

Business features

...Deirdre Hipwell reports on the problems facing the major pharmaceutical groups as they lose patent protection on their blockbuster drugs, with few replacements in the pipeline.

...Deirdre Hipwell reveals how Aim-listed ITM Power is developing hydrogen power technology for commercial vehicles in spite of little support from the government

[ pp.80-81, 85 ]

Briefs

Anglo American has put the US$1bn international assets of subsidiary Scaw Metals up for sale, with Goldman Sachs and UBS advising on bids. ● Home Retail Group subsidiary Argos is suing container shipping company AP Muller-Maersk for U$13m after it allegedly reneged on a shipping contract. ● Educational supplier RM Group is seeking to expand into Hong Kong and Singapore over the next year. ● Increased dividends are expected to be announced this week from companies such as Johnson Group, Hays and McBride. ● The London section of the Crossrail project could be delayed a year to save £1bn from its cost.

[ pp.77, 78, 79 ]

The Mail on Sunday

Comment

...Lisa Buckingham thinks the UK authorities should take a look at a Canadian organisation called Investment Canada which has to be convinced by a foreign predator that there is a 'net benefit' to Canada if a takeover bid is allowed to go ahead. But while this is to be admired, Canada's 'quite breathtaking support for price-fixing cartels' is not so welcome, especially the moves to force BHP Billiton if it takes over Potash Corporation to agree production quotas with other producers.

[ p.74 ]

Markets and Economics

Taking Stock: Simon Watkins suggests the current outbreak of M&A activity is mainly linked to commodity deals in emerging markets rather than any fundamental sign that 'happy days are here again'.

Economics: Dan Atkinson says this week's Bank of England figures for lending to individuals are likely to be fairly flat, which is now regarded as bad news even though the pre-2007 borrowing binge was seen as one of the causes of the financial crisis.

Outlook: The Restaurant Group is expected to report interim profits on Thursday up 9% at £23.7m.

[ p.78 ]

Briefs

Figures due on Friday for new construction orders have raised fears of a 'double-dip' slowdown for the building sector. ● Tesco is to reduce 2,000 duty manager positions at its Express convenience store chain, with the job function being taken over by deputy managers. ● Peacocks is to kick-start plans next month for a sale or refinancing with any deal completed by Christmas. ● The Caparo industrial conglomerate claims it has reached a new agreement with its banks after breaching loan covenants. ● About 40 former Baugur employees are facing legal action for personal loans believed to total more than £10m. ● A two-year trial of innovative tidal energy technology has been successfully completed by Bristol-based Marine Current Turbines. ● Travelex, owned by Apax Partners, is seeking to refinance its £1.5bn debts. ● Findel is seeking a buyer for its Express Gifts home shopping catalogue business. ● Some 17 fund managers have set up a lobbying group called the New City Initiative to press for a closer alignment of interests between investment managers and their clients. ● Dubai World's private equity operation Istithmar is seeking to sell its 40% stake in luxury spa firm ESPA.

[ pp.71, 72, 74, 75, 76, 78 ]

Sunday Express

Comment

...Tracey Boles thinks BBC employees who vote for strike action over proposed curbs to their pensions will receive little public sympathy, especially since many workers in the private sector have already had to put up with adverse changes to their retirement funds.

...Federal Reserve chairman Ben Bernanke has few credible options to boost the US economy if necessary, which makes it increasingly likely there will be a bumpy ride ahead.

[ p.F2 ]

Briefs

BP is expected within the next few weeks to reveal the findings of its internal inquiry into the Deepwater Horizon oil leak. ● Liquidators to Asil Nadir's collapsed Polly Peck empire are due to pay a final dividend to creditors next year of just 3.8p for every pound owed. ● A shortlist of up to 250 potential defence cuts will be presented to ministers this week as part of the Strategic Defence Review. ● The British Chambers of Commerce is set to warn on Monday that unemployment will continue to rise even as the economy grows faster than expected. ● Strong demand for the new Metro Bank could see it accelerate its branch opening plans. ● Etihad Airways says it hopes to break even next year. ● The UK arm of struggling Blockbuster is likely to continue to operate normally even if its US parent seeks bankruptcy protection. ● Apax Partners paid its partners nearly £46m in the year to 31 March, its latest accounts reveal. ● Phoenix Group Holdings is talking to its lenders about restructuring its £2.7bn of debts. ● Hedge funds with shares in Potash Corporation are believed ready to accept US$150 a share from BHP Billiton, which has already had an offer of US$130 rejected. ● Home shopping company Freemans, owned by Germany's Otto Group, saw losses for the year to end-February increase to £49.7m from £37.1m a year previously.

[ pp.F1, F2, F3 ]

Profiles

The Times

He helped M&S repel invaders: can he charm the investors?

Robert Swannell, Marks and Spencer chairman-elect, was a key player in the retailer's defence against the hostile takeover bid from Sir Philip Green in 2004. But M&S insiders believe it is Swannell's experience as a senior non-executive director of British Land during the transition years following the retirement of Sir John Ritblat that is more relevant. Yet given the iconic status of M&S in the country, Swannell will find chairing the retailer a 'massive job' and he would do well to follow his predecessor and wear M&S suits at the company's AGMs.

[ p.53 ]

The Sunday Times

Bookmaker gambles the future on football

Ralph Topping, CEO of William Hill, is defensive over suggestions that betting shops are rather an anachronism in the age of online and offshore betting. He claims that shops are still popular with working class punters, although also points out that betting on horses is being overtaken by gambling on football matches. In particular, Topping highlights the growth of 'in-play' gambling (where bets are placed during actual games) which he says has been 'phenomenonal.'

[ p.3.6 ]

The Sunday Telegraph

'An average engineer in India costs $7,000, an engineer in the UK costs $45,000'

Azim Premji, chairman of Indian IT services group Wipro, is investing heavily in India's educational system because he fears low standards will hamper the country's economic growth. Premji has a reputation for austere living (he drives a Skoda and flies economy) and has pledged to give away most of his fortune, estimated at about £11bn. But he appears irritated over the UK's apparent obsession with offshoring and outsourcing, pointing to Wipro's wide range of IT activities, which includes consultancy, process management and software development and infrastructure.

[ p.B9 ]

The Mail on Sunday

The King of Cups

David Kenton, group managing director of lingerie company Rigby & Peller, is embarking on an ambitious expansion programme for the privately-owned business although insists this will not be at the expense of his traditional customers, which includes the Queen. New shops are being opened in fashionable market towns such as Harrogate and Bath rather than big cities.

[ p.77 ]

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