PRESS DIGEST - British business - Dec 28

The Times

BILLIONAIRE BROTHERS IN TALKS TO FLOAT COMPANY

The Reuben Brothers have held discussions with banks about a potential flotation of their data centre business, Global Switch. The business has enjoyed a surge in value over the past year and could be valued at 2.7 billion pounds when it is listed in the third quarter of 2010. Potentially, this third inquiry into listing one of their concerns could turn out to be the most lucrative venture for the billionaire brothers.

FERRERO STILL IN THE MIX

Ferrero is said to be considering its options on a bid for Cadbury CBRY.L following the latter's rejection of a 10 billion pound offer from American food giant Kraft (KFT.N). Although there are suggestions that Ferrero is starting to distance itself from the UK chocolate company, the Italian confectioner has stated that its stance remains the same as a month ago.

ABU DHABI EYES EDF

Abu Dhabi's sovereign wealth fund is reported to be interested in EDF's (EDF.PA) UK distribution network and has joined the Canadian Pension Plan to generate a potential five billion pound bid. The unit was offered for sale in October. National Grid (NG.L) is also thought to be interested which could result in stiff competition between the two factions.

The Daily Telegraph

PROPERTY FIRMS DRAW UP 'LIVING WILLS'

In a move that mirrors similar contingencies mooted for the banking sector, a number of the UK's largest property firms have devised plans to avoid turning to shareholders or banks in the event of a future market crash. The plans, effectively 'living wills', will enable the firms to quickly identify those assets that could be sold off in order to boost their balance sheets should the markets nosedive once more.

RETAILERS FACE BLEAK 2010

The British Retail Consortium has warned that, despite record sales figures over the Christmas period, "2010 will continue to be rough" for retailers. In a BRC-led survey, 80 per cent of retailers say they expect to see no improvement on 2009's figures, while a separate study from Begbies Traynor predicted as many as 40,000 companies would fall into administration next year.

BANKS RAKE IN SIX MILLION POUNDS IN FEES FROM SMALL BUSINESS LOAN SCHEME

Research conducted for the Business Department has revealed that banks have been routinely inflating rates for small businesses to access the government's loan support scheme, resulting in the lenders collecting nearly six million pounds in fees. The 1.3 billion pound scheme, introduced for companies with sales of less than 25 million pounds seeking loans from 1,000 pounds to one million pounds, has typically required SMEs to pay 1.8 per cent of the loan in administration charges and a 6.75 per cent rate of interest - both figures exceeding the standard industry level. As calls increase for the government to investigate, Stephen Alambritis of the Federation of Small Businesses said: "This scheme should be the cheapest in town. The government should look at these charges and bring them in line with the charges imposed by the partially state-owned banks."

The Independent

BUYOUT BOSS HANDS HITS OUT AT BANKERS

Guy Hands has attacked the banking sector for luring the best people away from more "entrepreneurial, creative or leadership roles in the 'real' economy". The comments from the chairman of buyout group Terra Firma were made in his annual letter to the group's investors. In the letter, Hands also repeated a call for retail banks to be separated from their involvement with more precarious banking ventures.

MOST FIRMS ARE PLANNING PAY CUTS, SAYS BCC

The British Chambers of Commerce has conducted a study that shows two-thirds of 260 companies it polled intend to either cut or hold wages at their current level over the coming year, while 20 per cent will be cutting bonuses and addressing other benefits such as gym memberships. According to the BCC, this indicates that the economic recovery throughout 2010 will be "very fragile".

HIGH STREET WEATHERS THE STORMS OF 2009

Despite the high profile collapse of such stalwarts as Woolworths and Borders in 2009, some retail sector companies have grown profits thanks in part to careful management and a stronger-than-anticipated showing from consumers. The big four supermarkets all enjoyed healthy sales, with Tesco (TSCO.L) announcing pre-tax profits of more than three billion pounds. However, the sector is bracing itself for a difficult 2010, citing uncertainty over the election and the economy, potential tax rises and high unemployment as reasons to remain cautious.

The Guardian

CARPHONE TO REIGNITE PALM PRE SALES WITH FREE FLIGHT OFFER

Carphone Warehouse (CPW.L) is giving two free airline tickets to those who buy a Palm Pre before the end of January as speculation increases that sales of the phone have fallen far short of expectations. It is believed that O2, which offers the Palm Pre under an exclusive deal, has mountains of unsold phones. It is also believed that the iPhone is not doing very well for Orange, with rumours that nine out of 10 sales went to people who were already Orange customers, effectively making the iPhone an upgrade for them. The iPhone is available across O2, Orange, Tesco (TSCO.L) and Vodafone (VOD.L) and most customers want the 3GS version which is free on contracts from about 45 pounds a month, the same price at which O2 makes the Palm Pre free for customers.

RETAILER BANS PLASTIC BAGS

Holland & Barrett stores are introducing a ban on plastic bags from Jan.1 and are calling for a tax on disposable carriers. The health food stores are replacing plastic bags with jute and cotton bags which will cost between four and 99 pence each. Customers of Holland & Barrett use 7.6 million plastic bags a year. The chain says that across the UK each person uses an average of 167 bags per year. Ireland introduced a 15 euro cents tax on plastic bags in 2002 and within months a 90 per cent fall in usage was recorded.

RYANAIR LOCKED IN BATTLE WITH ITALIAN AUTHORITIES OVER SAFETY MEASURES

Ryanair (RYA.I) is locked in a dispute with the Italian civil aviation authority which it said was trying force it to lower its safety standards. The Irish carrier says that it will be suspending all its internal Italian flights from Jan. 23 in protest at two directives issued from Ente Nazionale per l'Aviazione Civile. The directives ordered ground staff to accept a wider range if ID documents from passengers who had checked in online. Ryanair said that in some cases it would have to accept passengers who were carrying 'nothing more than fishing licences', it currently requires either a passport or an official ID card.

Prepared for Reuters by Durrants