PRESS DIGEST - British business - Feb 21

The Mail on Sunday

TWO IN RACE FOR CLEAN COAL

The Department of Energy & Climate Change is expected to announce that both E.ON (EONGn.DE) and Scottish Power will share around 90 million pounds to help fund the costs of drawing up detailed blueprints for the world's first large scale "clean" coal power station. This follows reports that the two firms have won the second stage of the one billion pound competition to build the facility. The government will contribute around one billion pounds towards the construction of the carbon-capture plant, which will sequester harmful emissions and pipe them underneath the North Sea where they will be stored.

TRAVELODGE SET TO BUILD CITY HOTELS

Budget hotel chain Travelodge [DUBAHT.UL] is to reveal a 61 million pound plan to build ten hotels, increasing its stock of over 28,000 rooms by 1,133. The hotels will cost between 2.2 million pounds and 9.9 million pounds apiece, with three in London, two in Manchester and one each in Liverpool, Bristol, Andover, Camberley and Cannock. Travelodge intends to create 300 jobs and will recruit all entry-level staff through Jobcentre Plus from the long-term unemployed. The firm plans to have 70,000 rooms by 2020.

The Sunday Times

UK FIRM SNAPS UP OZ RIVAL

UK firm SLR has acquired its Australian rival Heggies in a 12 million pound deal. The environmental consultant, which is owned by 3i (3IN.L), is understood to be looking at a string of possible acquisitions. Both firms advise companies on energy efficiency and ways in which they can cut their carbon footprint. Heggies' previous projects include the design of a hot air exhaust system for the Sydney Harbour tunnel. The market for these services has expanded with the growing governmental realisation of the importance of climate change and 3i has given SLR its backing to roll up rivals.

TORUS TAPS INTO 120 MILLION POUNDS

Torus Insurance, the Clive Tobin business which is one of London's fastest growing insurers, has received a 120 million pound cash injection from American private equity investors. The money will help fund the insurers' underwriting operations. The total equity of the company now stands at over one billion dollars. The business was launched 18 months ago with a staff of 20, which has already grown to 260, and investment bankers expect the business to go public within the next three years.

BEACON ON BRINK OF SALE

Beacon, operator of some of the biggest bingo clubs in the UK, is on the verge of being sold to Praesepe PRAP.L in a deal worth around 45 million pounds. The entertainment group was taken over by its lenders last year, including the Royal Bank of Scotland (RBS.L), which now wishes to sell the business to Praesepe, owner of a number of high street gambling centres. Praesepe shares have been suspended while the company works on a strategy to finance the deal. All parties refused to comment.

WYNDHAM SET ON COURSE FOR HOSEASONS TAKEOVER

U.S. leisure group Wyndham Worldwide (WYN.N), which owns the holiday business English Country Cottages, is edging closer to a successful 40 million pound takeover deal for the British holiday firm Hoseasons. So far Wyndham has fended off rival bidders, taking a leading position to close a deal for the holiday specialist in boating trips and short breaks. Analysts are positive about a tie-up, which is expected to be finalised in the coming weeks, believing the Hoseasons brand fits comfortably with Wyndham. Meanwhile, the owner of Premier Inn hotels, Whitbread (WTB.L), suffered a blow after motorway services chain Roadchef said it would be replacing the 14 Premier Inns on its sites with the Days Inn brand, following disappointing sales.

STV SUES FOR LOST VIEWERS

Scottish broadcaster STV (STVG.L) is expected to mount another multi-million pound lawsuit against ITV (ITV.L), suing over prejudicial behaviour by the makers of Dancing on Ice. STV, which holds the ITV licence in Scotland, believes it is due between five million pounds and 15 million pounds in compensation as a result of the impact of spin-off shows from the X Factor and Britain's Got Talent being aired on ITV2, in which STV has no economic interest. Additionally STV, which posts its full-year results this week, will seek up to 16 million pounds from ITV for alleged unpaid advertising revenue and demand compensation for ITV's online deals with companies like BT Vision to deliver network content in Scotland.

DRAX MAY TAKE GREEN PROJECT OUT OF UK

The chief executive of Drax (DRX.L), Dorothy Thompson, has said the FTSE 100 energy group will have no choice but to move a planned two billion pound green energy plant to a more favourable regulatory regime if the government does not rescind on its decision to restrict subsidies. In 2009 Drax, which operates the Selby coal plant, was planning to construct three power plants that would use alternative biomass fuel like peanut husks, as part of plans to go green. Thompson said: "We've spent a lot of time and energy building up a skill base around biomass. If we are unable to do it in the UK, then we will go outside."

SHAREWATCH

Rentokil Initial (RTO.L) (Turnaround plan sees profits doubled over the last year, acquisitions hinted at)

The Sunday Telegraph

EUROPE GIVES GREEN LIGHT TO UK PHONE GIANT

The European Commission has given the green light for a merger between Orange and T-Mobile [TMOG.UL] in what will become the UK's largest mobile operator with 37 percent of the market, overtaking previous leader O2. The merger, originally proposed last September, is set to create the UK's leading mobile operator with pro forma 2008 revenues of approximately 7.7 billion pounds and earnings before interest, tax, depreciation and amortisation of 2.1 billion euros. Gervais Pellissier, chief financial officer of France Telecom (FTE.PA), owner of Orange, said that shareholders of both France Telecom and Deutsche Telekom (DTEGn.DE), owner of T-Mobile, would "benefit from higher profitability and an immediate cash flow per share accretion".

GERMAN PARENT EYES TUI BID

German company TUI AG (TUIGn.DE), Europe's biggest tour operator, has held clandestine talks with banks within the last few weeks over a potential multi-million pound bid for the 48 percent of FTSE 100 holiday firm TUI Travel (TT.L) that it does not hold already. The banks are thought to include Merrill Lynch, JP Morgan and Deutsche Bank. However, a spokesman for TUI AG said the company had no formal plans to restructure the group at this stage. Last Friday, TUI Travel was valued at 2.96 billion pounds after shares closed at 265.8 pence.

QUESTOR

Cluff Gold (Hold)

Compass (CPG.L) (Buy)

The Independent on Sunday

VT OFFERS 230 MILLION POUNDS TO INVESTORS TO BAR BABCOCK

VT Group VTG.L, the support services company, is understood to have offered shareholders a 230 million pound special dividend in an attempt to ward off a bid from Babcock International (BAB.L). Sources say that VT's chairman, Paul Lester, took his proposal to the group's big shareholders last week, reiterating that the 1.25 billion pound Babcock offer undervalued the business. It is believed the group's net cash balance of 230 million pounds could be distributed among shareholders. Lester said: "This is a good business. The current price isn't enough and we have other options."

Prepared for Reuters by Durrants