PRESS DIGEST - British business - Sept 6

The Sunday Times

3.5 BILLION POUNDS BID BATTLE FOR T-MOBILE

Vodafone (VOD.L) and Telefonica (TEF.MC) are both believed to have made an estimated 3.5 billion pounds bid for Deutsche Telekom-owned (DTEGn.DE) T-Mobile UK that would create the biggest mobile phone group in Britain. The chief executive of Deutsche Telekom, Rene Obermann, is thought to favour the proposal submitted by France Telecom (FTE.PA) to merge T-Mobile UK with Orange and believes a sale at 3.5 billion pounds would result in another writedown for the division. A decision is expected in a few weeks, but it is possible that all proposals could be rejected.

THOMAS COOK'S 800 MILLION POUNDS PLACING

A stake worth more than 800 million pounds in holiday group Thomas Cook (TCG.L) is expected to be placed with institutional shareholders in the most dramatic money raising move by creditor banks of the stake's owner, German conglomerate Arcandor (AROG.DE). The majority of the stake has been pledged to Arcandor's three main lenders -- Royal Bank of Scotland, Commerzbank and Bayern LB - as collateral on a one billion euro loan. The shares are expected to be sold at a small discount to the current price of 229.75 pence.

BARRATT SEEKING 500 MILLION POUNDS TO REBUILD

Barratt Developments (BDEV.L) will launch a 500 million pounds rights issue at the end of this month alongside the publication of its full-year results. The cash call will form part of further cash raising moves by British companies over the next couple of months totalling five billion pounds. Barratt's rights issue will be used to reduce its 1.3 billion pounds debt pile and fund the purchase of land for new developments.

RICHARD BAKER BACK IN THE CITY WITH WHITBREAD

Former Boots chief executive Richard Baker will return to Whitbread (WTB.L) this week as a non-executive director. His appointment is likely to fuel speculation he is being lined up to replace Alan Parker, the leisure group's chief executive. However, Chris Rogers, Whitbread's finance director, and Patrick Dempsey, managing director of the group's hotels and restaurant business, are strong internal candidates. Baker is also a non-executive chairman of Virgin Active and his appointment will be made in conjunction with the latest trading figures to the City.

STAGECOACH IN 100 MILLION POUNDS RAIL DEAL

Stagecoach (SGC.L) has agreed to give 100 million pounds to the Department for Transport as a "change of control" payment in exchange for an agreement that the government will not force it to relinquish National Express's (NEX.L) East Anglia and C2C franchises as "cross default" punishment for the failure to honour its 1.4 billion pounds East Coast contract. The agreed figure is higher than analyst's predictions. National Express is questioning the legality of the DfT deal.

LIVE GAMBLING COMES TO TV AS FIVE SIGNS LANDMARK DEAL WITH NETPLAY

Broadcaster Five has signed a landmark deal with Netplay (NPT.L), the interactive gambling group, that will allow viewers to bet thousands of pounds on roulette from their own homes. The shows will be broadcast three nights a week between midnight and 4 a.m., and extended to six nights in October and every night in 2010. The deal is seen as an attempt to increase revenue as a result of the drop in TV advertising. As part of the deal Five has the option to buy five percent of Netplay's shares for 28.5 pence.

The Independent on Sunday

BANKS VIE FOR TWO BILLION POUNDS FLOAT BY OWNER OF MADAME TUSSAUDS

Merlin Entertainments Group, the owner of Madame Tussauds, is in the final stages of a two billion pounds listing in early 2010 that could see it join the FTSE 100. Potential bookrunners for the listing, which include Goldman Sachs, JP Morgan, Citi and Merrill Lynch, have presented their cases for the mandates over the past two months and are now expecting a decision. A market source has pointed to Citi and Goldman as favourites since they would have the financial clout to refinance Merlin's debts. Merlin chief executive Nick Varney said in July that although a listing would be popular, "I can't say at the moment if we're going to float."

MONTAGU'S NEW FUND TO BE FIRST SINCE CRASH

Montagu Private Equity is poised to become the first major UK buyout group to start raising a major investment fund since the 2007 collapse. The company, whose portfolio includes waste management group Biffa, is planning to raise a fund worth around 1.7 billion pounds. A Montagu spokesman said the group would consider raising a new fund during the next 18 months, but added that it would first have to fulfil its current obligations. Montagu should have strong backing for a new fund due to its reputation as one of the best performing private equity groups of the past few years.

REED TO REVAMP THREE BRANDS

Reed Elsevier (REL.L) is revamping its New Scientist, Variety print brands and its Elsevier arm in an effort to ward off the effects of the recession. Variety is believed to have been particularly affected by the advertising slump. Keith Jones, chief executive of the Reed Business Information division, notified staff on Friday that a team had been enlisted to examine "how we can ensure the long-term success of three of our biggest print brands". A solution is likely to involve driving the titles' online content, as Ian Smith, chief executive of Reed Elsevier, is known to be keen on boosting Web revenue and has already a number of U.S. titles up for sale.

The Observer

XSTRATA WEIGHS MOVE FOR PLATINUM PRODUCER

Xstrata (XTA.L) is considering making a bid approach for platinum producer Lonmin (LMI.L) and has instructed advisers JP Morgan and Deutsche to conduct a feasibility study. Lonmin, the world's third-largest producer of platinum, is valued at 2.8 billion pounds on the London Stock Exchange and Xstrata's bid, possibly a mix of cash and shares, would value the firm at over three billion pounds. A bid for Lonmin is likely to put an end to Xstrata's attempts to merge with Anglo American (AAL.L).

CUT INTEREST RATES TO ZERO SAY FIRMS

The British Chambers of Commerce is set to urge Bank of England policymakers to cut interest rates to zero in order to help sustain the nascent economic recovery. The BCC's chief economist David Kern has warned that business is still struggling from a lack of bank lending and the Bank's own data indicates that lending to business is falling despite interest rates being at a record low 0.5 per cent.

TAXPAYERS' BILL FOR MG ROVER REPORT IS 16 MILLION POUNDS

With the report on the investigation into MG Rover's collapse set to be published on Friday, it has emerged that the cost of the investigation totalled more than 16 million pounds. The investigation, conducted by accountants BDO Stoy Hayward and government-appointed inspectors Guy Newey QC and Gervase MacGregor, took over four years to complete and also covered the business affairs of the so-called Phoenix Four, who acquired MG for 10 pounds in 2000. The Phoenix Four have always denied any wrongdoing on their part and have called for the report's publication in order to clear their names.

The Mail on Sunday

PRET STRUGGLES UNDER DEBT

Pret A Manger is seeing its profits wiped out by interest payments on the debt it has been saddled with by its private equity owner Bridgepoint Capital. Figures filed at Companies House show that, since the 2008 acquisition, the sandwich chain showed an operating profit of 14.4 million pounds but the payments brought the final pre-tax figure down to a loss of 34.2 million pounds. Pret's finance director Nick Candler has said the figures are misleading, that the debt repayments are not as large as they seem and that the company is not under any financial pressure.

ITV BAULKS AT TONY BALL'S PAY DEMAND

The ITV (ITV.L) nominations committee is understood to be in dispute with Tony Ball over the remuneration package the former BSkyB chief executive is demanding to become the new chief executive of the terrestrial broadcaster. ITV has been reluctant to appoint Ball, as a number of the institutional shareholders who back him have been critical of current management. The broadcaster will discuss the matter at a board meeting next week.

JAEGER BOSS IN LINE TO SNAP UP AQUASCUTUM

Fashion entrepreneur Harold Tillman is thought to be considering a bid for the 158-year-old brand Aquascutum. Although the brand receives a high profile, via advertising campaigns featuring models such as Giselle Bunchen, it has been loss-making for years and any bid is unlikely to cover the losses incurred by Japanese owner Renown. It is understood Tillman faces competition from Alan Lewis, the owner of clothing brand Crombie.

Prepared for Reuters by Durrants