PRESS DIGEST - British business - Nov CORRECTION

The Times

BA AND IBERIA MERGER CLEARED FOR TAKE-OFF

British AirwaysBAY.L and Iberia IBLA.MC have agreed a merger deal that will create Europe's largest airline. The deal is expected to trigger cost saving measures at both airlines with job losses at head offices in London and Madrid, maintenance facilities and among sales staff. The value of the combined airline will be 4.5 billion pounds ($7.46 billion). BA shareholders will control 56 percent of the new group and Iberia the rest. Under the terms of the deal, BA will be incorporated in Madrid, but the headquarters and stock market listing will be in London. BA's Chief Executive Willie Walsh will head the merged group.

CAUTIOUS 3I TURNS ITS BACK ON NEW INVESTMENTS

Private equity group 3i(III.L) said it has not made a single new company investment in the past six months as uncertainty about the real value of assets made investors cautious. Chief Executive Michael Queen said it was the quietest period for new investment since he joined the group in 1987. However, 3i was confident investment volumes would pick up in the next year and it had put aside two billion pounds to make acquisitions in traditional buyouts, growth companies and infrastructure deals.

ENTREPRENEURS ACCUSE RUTLAND OF CONTRACT BREACH

Two entrepreneurs, Paul Vercoe and John Pratt, have accused Rutland Partners, a private equity firm, of pushing them aside after they presented the group with a business plan to buy and expand Harvey & Thompson, a private pawnbroker. The pair say that in return for the plan, they would be given senior positions and equity stakes in the business once the takeover was complete. The High Court was told that Rutland committed a breach of contract and confidence when they acquired Harvey & Thompson "without the slightest regard" to its obligations to Vercoe and Pratt.

TEMPUS:

Serco(SRP.L) (short-term investors should pause for thought)

Amec(AMEC.L) (stand aside)

Synergy Healthcare(SYR.L) (buy on weakness)

The Daily Telegraph

EAST COAST LINE TAKEOVER THWARTS NATIONAL EXPRESS MOVE

Transport Secretary Lord Adonis will take control of the National Express'(NEX.L) East Coast franchise at one minute to midnight today in order to stop the company retaining the right to extend its East Anglia franchise for three years from April 2011. When National Express began operating the service in 2004, a clause in the contract allowed for a three-year extension provided certain performance criteria were met. A senior National Express source said Adonis had been "cute with his timing" even though the stipulated criteria had been met.

KENMORE CALLS IN THE ADMINISTRATORS, BUT SAYS IT IS 'BUSINESS AS USUAL"

Edinburgh-based property group Kenmore KEIFq.L has placed 21 of its companies into administration and a further two into receivership. Accountants Grant Thornton said funding had been secured from Lloyds Banking Group(LLOY.L) that will enable Kenmore to continue to trade while restructuring opportunities are explored. The company employs 50 staff in Britain and has investments in Britain, Europe and the Middle East. Grant Thornton's Rob Caven said: "Our immediate objective is business as usual."

AD SALES DECLINE SLOWS AT TRINITY

Trinity Mirror (TNI.L) reported a slowdown in the decline of advertising revenues with its national titles undergoing the biggest improvement. The owner of the Daily Mirror, Sunday Mirror and The People, said advertising sales were down by 20 percent in the 17 weeks to October 25, compared with 28 percent in the first half. Figures for regional publications are also set to improve. The company also reported that online advertising was down 19 percent year-on-year, but in the 17 weeks to October 25, digital sales were down 22 percent on those 12 months ago.

QUESTOR:

Inmarsat(ISA.L) (buy)

HSBC Infrastructure Fund(HICL.L) (buy)

The Independent

ASDA SALES GROWTH HIT BY FALLING FOOD PRICES

Supermarket Asda has blamed declining growth "entirely" on falling food price inflation. Its third-quarter like-for-like sales excluding fuel and VAT increased 5.9 percent, compared with a 7.2 percent increase in the second quarter. Judith McKenna, Asda's finance director, said that the decline in growth had happened despite a rise in sales volumes and profits. In non-food lines, McKenna forecasted strong competition on price, saying that this year would "be the most aggressive on price in a decade".

COSTCUTTER TO BID FOR THRESHERS' ESTATE

Convenience store chain Costcutter looks set to join three competitors in bidding for large parts of First Quench Retailing's store estate. Along with off-licence operators Rhythm & Booze, Bargain Booze and EFB Retail, Costcutter is expected to inform administrator KPMG of its interest on Friday. KPMG, which is looking to sell the business while the stores are still adequately stocked, is keen to complete the sale of FQR's estate in the next two weeks.

WH SMITH CAUTIOUS ON CHRISTMAS OUTLOOK

WH Smith(SMWH.L) has revealed a sales decline in the 10 weeks to Nov. 7, and remains cautious over its Christmas trading prospects. Total group sales since Sept. 1, the start of WH Smith's financial year, fell one percent on 2008. Underlying sales at railway stations and airports fell two percent. The high street was the worst-hit sector, with a four percent dip in same-store sales. WH Smith said overall performance met expectations.

INVESTMENT COLUMN:

Euromoney(ERM.L) (buy)

Resolution (hold)

Dairy Crest(DCG.L) (hold)

The Guardian

BT CHIEF CALLS FOR 1.5 BILLION POUND COST CUTS

Ian Livingston, chief executive of BT(BT.L), said on Thursday that the company now plans to save "at least" 1.5 billion pounds this year, raising the prospect of further job cuts. Livingston also revealed that BT's pension fund, Britain's biggest private sector scheme, had a 9.4 billion pound deficit at the end of September, In May, Livingstone announced plans to cut 15,000 workers over a 12-month period as part of a plan to save one billion pounds. In Thursday's announcement, he did not say whether his new plans for increased savings would result in over 15,000 jobs being lost.

MAYFAIR-BASED HEDGE FUND UNDER SCRUTINY BY SERIOUS FRAUD OFFICE

Mayfair-based hedge fund Dynamic Decisions Capital Management is being investigated by Britain's Serious Fraud Office over concerns that some of its funds have suffered significant losses. A former fund director has said that Dynamic incurred the losses last year before going into liquidation in May. This year, the company indicated that its main fund had an unaudited net asset value of 550 million dollars. However, a court petition filed in March suggested a figure closer to 20 million dollars. Several investors have complained to the SFO.

BRITISH GAS PROFIT RISE FUELS CONSUMER GROUPS' ANGER

Centrica(CNA.L) has said that the residential arm of British Gas is on track to make 541 million pounds this year, compared to 379 million in 2008. The expected rise, which comes despite customers consuming seven per cent less gas in the first three quarters of 2009, angered consumer groups, who believe British Gas should have passed on a 25 percent reduction in wholesale energy costs in full. Robert Hammond, of watchdog Consumer Focus, said that suppliers were ignoring consumers in fuel poverty. Centrica defended its profits, saying it needed three billion pounds to spend on new energy infrastructure.

Prepared for Reuters by Durrants ($1=.6033 Pounds)