PRESS DIGEST - British business - June 28

The Sunday Times

RAIL FRANCHISE TALKS COLLAPSE

Talks between National Express (NEX.L) and the Department for Transport over the east coast main line have ended in deadlock just three days ahead of a crucial trading update from the bus and rail group. National Express, which faces heavy looses from its current agreement, needs to resolve the matter before it launches a 400 million pound rights issue. City sources say the two sides were close to agreeing a management contract to replace the existing franchise that would allow National Express to continue running trains on the line for an agreed fee, while officials would retain the right to re-let the contract. However, talks collapsed when the department refused to replace the current contract.

THAMES WATER BOSS ON ACQUISITION SPREE

David Owens, chief executive of Thames Water (THWEF.PK), plans to reshape the industry by taking over a dozen smaller rivals. The government is considering easing the sector's merger restrictions and Owens believes his strategy would lower bills and improve both customer service and investment. Of the 12 "diddy little water companies around the south east", Owens identifies South East Water, Dee Valley Water and Sutton and East Surrey Water as vulnerable. Tony Wray, Owens' counterpart at Severn Trent (SVT.L), has also expressed a desire to merge with rivals. However, allowing regional monopolies to grow would prove controversial in an industry renowned for poor service.

TELECOM GROUP HEADS FOR 200 MILLION POUND FLOAT

Daisy Communications, one of the UK's fastest-growing telecoms firms, plans to launch on Aim at the same time as it raises funds in an effort to fund acquisitions. Chief executive Matthew Riley is believed to have been guided by retail entrepreneur Philip Green on the transaction.

The Sunday Telegraph

SAINSBURY'S CLOSES IN ON NEW CHAIRMAN

Former GUS executive David Tyler is one of a number of candidates being considered to succeed Philip Hampton as chairman of J Sainsbury's (SBRY.L). Tyler currently chairs outsourcing group Logica and is on the board of both Reckitt Benckiser and luxury goods group Burberry. Others thought to be under consideration include John Peace, who also sits on Burberry's board. The new chairman will be joining the supermarket group at a time when it is beginning to show it can match the impressive performance of rival Tesco (TSCO.L).

PROPERTY VENTURE DEFIES SLUMP

London & Stamford (LSP.L), the new property venture set up by Raymond Mould and Patrick Vaughan, has apparently defied the slump in the commercial property sector. The early success of the venture has seen their advisory company LSI management collect over five million pounds in fees. The two men have gained a reputation for being able to accurately predict property cycles and the payout follows London & Stanford's posting of a 20.1 million pound pre-tax profit in the first full financial year since its 2007 flotation.

The Independent on Sunday

DAVIES TURNS DOWN TOP JOB AT LLOYDS

Trade minister Lord Davies is expected to turn down an offer to take up the chairmanship of Lloyds Banking Group (LLOY.L). The search is on for a replacement for the departing Sir Victor Blank and UKFI chief executive John Kingman is known to have been courting Davies over the past few weeks. Davies is said to be enjoying his ministerial role too much to want to return to the commercial sector. Other names under consideration include former Citigroup chairman Win Bischoff.

REBEL INVESTORS LINE UP AGAINST MARSTON'S CASH CALL