PRESS DIGEST - Financial Times - June 6

Financial Times

BUSINESS ATTACKS INFIGHTING AT EXPENSE OF TACKLING RECESSION

Business groups warned that the government's infighting risked inflicting "severe damage" on Britain on Friday night, in a scathing attack on Labour's "political hubris". David Frost, director-general of the British Chambers of Commerce, revealed that employers have watched the unfolding chaos with "utter incredulity". Frost said: "This political hubris cannot continue or the interests of the UK will be severely damaged." Other leading business organisations backed the call for ministers to turn the focus on fighting the recession instead of internecine warfare.

PRESSURE MOUNTS ON RIO CHIEF TO QUIT

Pressure was mounting on the chief executive of Rio Tinto(RIO.L), Tom Albanese, on Friday after the mining group abandoned a controversial 12.2 billion pound ($19.58 billion) fundraising deal with Chinalco. Rio Tinto moved instead in favour of a $15.2 billion rights issue and a joint venture with rival BHP Billiton(BLT.L). "In the fullness of time, the chairman is likely to conduct a review of his board," said Robert Talbut, investment chief at Rio shareholder Royal London Asset Management. The group will be forced to pay Chinalco a $195 million fee for breaking the deal, and its shares will be offered at 14 pounds to UK shareholders and 28.29 Australian dollars to Australian shareholders.

REGULATORS TO ASSESS IRON ORE VENTURE

Rio Tinto(RIO.L) and BHP Billiton's(BLT.L) decision to form a joint venture has upset the Western Australian state government. The state's premier, Colin Barnett, said he was concerned the iron ore venture was structured in such a way that it would enable the miners to avoid a 501 million pound stamp duty bill. Barnett warned the mining groups that there was a "long way to go" for them to clear regulatory obstacles for their venture, including approval from the Western Australian government. The announcement served as a reminder of the hurdles still facing the merger of BHP and Rio interests in Australia's Pilbara region.

TURKISH GROUP IS HERITAGE TIE-UP TARGET

Turkey's Genel Enerji has been revealed as the unnamed company engaged in merger negotiations with Heritage Oil. Ever since the London-listed group announced on Wednesday it was in talks about a merger that was to be treated as a reverse takeover, speculation on the possible partner has been rife. According to the source close to the discussions, Genel would contribute assets to the enlarged entity rather than buying shareholders out. The person added that if a deal is completed, it could be announced by the middle of next week.

CLOSURE THREAT TO FINAL SALARY PENSIONS

According to Hewitt Associates, more than half of all employers surveyed at the start of this year were considering closing their final salary pension schemes to existing members. Hewitt is to release the study next week -- just days after a string of the UK's largest companies announced the end to their final salary plans. BP(BP.L), which previously operated one of the nation's best-funded schemes, signalled its end to new employees from April.

DIAMOND EYES BLACKROCK SEAT

The president of Barclays(BARC.L), Bob Diamond, is seeking to join the board of BlackRock if the US money management group agrees to acquire Barclays Global Investors (BGI), the UK bank's asset management business. On Friday night, BlackRock was on the verge of agreeing a 6.3 billion pound-plus deal to buy BGI, which would allow the UK lender to bolster its balance sheet. However, negotiations could yet stall after Barclays demanded at least $12 billion.

CARPHONE REVEALS BREAK-UP TIMETABLE

Carphone Warehouse(CPW.L) has revealed it is working towards the demerger of its telecommunications and retail businesses by March 2010, as it announced full-year figures in line with analyst expectations. Chief executive Charles Dunstone said the company had effectively overcome the two main issues in its efforts to create two separately-listed entities for the assets, which are being split. Roger Taylor, chief financial officer, said: "If we go on the September half-year figures, it could be done by March. If not, we will go on the next full-year figures and have it done by July 2010."

TCHENGUIZ ANSWERS HIS M&B CRITICS

Property entrepreneur Robert Tchenguiz has had a bad press from the fall-out of Mitchells & Butlers'(MAB.L) disastrous interest rate swaps. Tchenguiz, one of the biggest individual losers of the financial crisis, has revealed that he is sore and wants to set the record straight. "I'm really upset about it. It's the perception. People don't know the facts," said Tchenguiz. According to the entrepreneur, the lesson he learned from the crisis was that "things can get a lot worse than your worst-case scenario".

FULLERS SAYS GLASS STILL HALF EMPTY

The chairman of Fuller, Smith & Turner, Michael Turner, has cautioned against translating the levelling off of the downturn in the pub trade into signs of a recovery in the sector. "We might have had a better few months in the industry but I think the economy has further to fall," said Turner. His comments come as Fullers reported a stronger set of results than expected. Its shares gained 21.5 pence to close at 517.5 pence.

NEW CODE SETS FRESH STANDARDS

A new code on voting and board oversight will see beefed up powers for shareholders in the UK to make company directors more accountable. The code outlines core standards of shareholders' engagement with companies. It was drawn up in the wake of the banking crisis and calls on investors to use their votes more aggressively and to collectively act to impress their message upon companies. However, the plans have already come under attack from some quarters for being too tame.

WEEKEND SHARE WATCH

Goal Soccer Centres [Recent placing strengthens balance sheet]

Redhall [Performance makes it one to consider]

Prepared for Reuters by Durrants ($1=.6232 Pound)