PRESS DIGEST - British business - Feb 22

The Times

ONLINE GROWTH FALLS

The trend for online purchases in the UK fell to its lowest level last month, according to figures published by the IMRG Capgemini e-Retail Sales Index. Electrical goods, clothes and holidays were the online sectors that recorded the biggest drop in sales, with monthly growth for January gaining only five percent compared with 19 percent for the same period in 2009.

TELL SID -- TORIES OFFER ANOTHER SHARE BONANZA

The Conservatives have announced plans to offer subsidised shares in the Royal Bank of Scotland (RBS.L) and Lloyds Banking Group (LLOY.L) to people on modest incomes should they win the forthcoming election. The party said the sale would only happen when the government stood to make a profit, which could take as long as five years. The policy has attracted criticism from Lord Mandelson, the Business Secretary, and Vince Cable, the Liberal Democrats' economics spokesman.

FUND MANAGER CONDEMNS PROPOSAL FOR PAYOUT AT VT

One of support services company VT Group's VTG.L leading shareholders has criticised the proposed 233 million pound special dividend, for putting the company "back at square one". VT is considering offering 126 pence a share in an attempt to entice investors away from UK rival Babcock International's (BAB.L) 1.25 billion pound takeover bid. Tim Steer at Artemis, the fund manager which holds around five percent of VT Group shares, said the payout could put a stop to its 330 million pound offer for Mouchel (MCHL.L). Steer said: "VT is meant to be branching out from defence, not limiting itself to it."

The Daily Telegraph

MANUFACTURERS SEE CONDITIONS STABILISE

The EEF, the manufacturers' organisation, said credit conditions in the manufacturing industry are stabilising, but that financial systems are yet to be tested. A survey of more than 300 companies found that a quarter sought finance for working capital over the past two months and in the majority of cases their needs were met. Lee Hopley, chief economist at the EEF, said: "We are only at the early stages of a recovery and as demand for finance has been subdued the financial system has yet to be tested."

DIAGEO IN SUPERMARKET SCHMOOZE

Diageo (DGE.L), the world's biggest spirits maker, is strengthening its relationships with the UK's leading retailers to convince British drinkers to spend money in supermarkets rather than at the pub. Simon Litherland, Diageo's managing director for Great Britain, acknowledged that most of the growth in volumes comes from shops, despite sales through pubs being more profitable. Sales in Britain increased five percent and volumes increased six percent in the six months to the end of December, compared with a five percent sales decline in the European business as a whole.

STELLAR'S AIM DEBUT IS WELL-STARRED FOR FUTURE

West African-focused explorer and producer Stellar Diamonds begins trading on Aim this Monday, following the completion of a 10.4 million pound reverse takeover by West Africa Diamonds. RBC Capital Markets was the nominated adviser and broker to the company, which also raised five million pounds via a placing. The first mining group to list on the market since June 2008, Stellar will have a market capitalisation of around 19 million pounds. The company intends to use revenue from two producing alluvial mines at Bomboko and Mandala to fund its Sierra Leone and Guinea-based development projects.

The Independent

SABLE WILL HELP RUN DMC

Sable Mining Africa (SBLM.L), the AIM-listed natural resources investment group, has purchased a 29.33 percent stake in the South African coal digger Delta Mining Consolidated for 11.4 million pounds. The move will grant Sable exposure to DMC's coal interests in South Africa and Botswana. Andrew Groves, Sable's chief executive, said: "This deal represents our first transaction aimed at building Sable into a major mining company focused in southern Africa." The group's market capitalisation stands at 131 million pounds and has Harbinger, Fidelity and Oppenheimer among its backers.

DAISY'S TEN MILLION POUND CASH PURCHASE

Aim-listed Daisy Group (DAY.L), which specialises in buying IT services from the likes of BT (BT.L) and Cable & Wireless CW.L and reselling them to the SME sector, has acquired Northumbrian IP telecoms carrier BNS Telecom Group in a 10.45 million pound deal. The 20 pence-a-share offer represented a 220 per cent premium on BNS's June 3 2009 closing price. The group has embarked on a string of acquisitions since raising 84 million pounds when Freedom4 reversed into Daisy Communications last year. Chief executive Matthew Riley described the latest move as a further step "towards the Daisy Group consolidating this fragmented sector".

ROYAL LIVER HOLDS RESCUE TALKS WITH RIVAL

It is understood that Royal London [ROLGPI.UL], the mutual insurance company, last week began merger negotiations with rival Royal Liver. The 160-year old company has been up for sale since the summer of 2009 and the latest move by Royal London follows the breakdown of an attempt to strike a deal with its local rival, Liverpool Victoria. The Financial Services Authority is currently conducting a far-reaching investigation into the mutual insurance sector.

TRAVELODGE BUYS TEN HOTELS FOR 61 MILLION POUNDS

Travelodge [DUBAHT.UL] is to add another ten sites to its chain at a cost of 61 million pounds. The budget hotel group aims to become the biggest hotel brand in London by the 2012 Olympics and the purchases, which will deliver an additional 1,133 rooms and create 300 jobs, include three new leasehold hotels in the capital. The other sites are in Manchester, Liverpool, Bristol, Camberley, Cannock and Andover. Staff for the sites will come from the long-term unemployed.

The Guardian

HALIFAX SHARE OF MORTGAGES COLLAPSES IN WAKE OF RESCUE

Lloyds Banking Group (LLOY.L) is expected to reveal that the market share of mortgage lender Halifax has fallen significantly following its rescue takeover. According to mortgage brokers, Halifax has virtually vanished from the "best buy" tables for loans and has been overtaken by Abbey, which has become Britain's top lender under Santander (SAN.MC). HSBC (HSBA.L) has also gained market share as a result of Halifax's decline, which is thought to be more severe than that experienced by Cheltenham & Gloucester and Birmingham Midshires -- Lloyds' other main mortgage lending brands.

AA BECOMES LATEST PRIVATE EQUITY FLOTATION TO FALL...

Acromas Holdings, the private equity-owned business formed through the merger of AA and Saga group, has abandoned plans to float on the stock market this year. Despite Acromas' borrowings of six billion pounds, chief financial officer Stuart Howard expressed confidence that potential investors will look beyond the numbers and "focus on the strength of the management, the strength of the brand and the strength of the underlying business" when it eventually seeks a public listing.

Prepared for Reuters by Durrants