PRESS DIGEST - British business - May 11

The Sunday Times

BAE BOSS SET TO LAND AT BABCOCK

Mike Turner, outgoing chief executive of BAE Systems (BAES.L), is in negotiations to become chairman of support services group Babcock International (BAB.L) when its current chairman Gordon Campbell stands down next year. Turner, on the Babcock board in the late 1990s, will initially join as a non-executive director. Confirmation of the appointment could be made alongside a strong set of results which Babcock is due to announce this week.

AMERICANS LOOK INTO RBS SUB-PRIME DEALS

Royal Bank of Scotland (RBS.L) is being investigated by the U.S. Securities and Exchange Commission over its exposure to American sub-prime mortgages. The probe, launched in March, covers the bank's interests in securities backed by sub-prime home loans, as well as residential mortgages written by U.S. subsidiaries. Details of the investigation are buried in the prospectus for the bank's imminent 12 billion pound rights issue, which is to be put to a vote at a shareholder meeting this week. A spokesman for RBS declined to comment on the matter beyond what has been said in the prospectus.

FRIENDS PONDERS SHARE SPLIT

Friends Provident FP.L is considering a share split to dispose of 52 percent in asset management business F&C (FCAM.L). The life assurer has been scouting out interest in the stake as part of a disposal programme. A number of potential bidders, including Aberdeen Asset Management and Blackstone, have explored a possible offer but it is understood Friends has yet to receive any offers that match its expectations.

The Sunday Telegraph

SOARING COCOA PRICE FORCES CADBURY REVIEW

Cadbury's (CBRY.L) board is to discuss the impact of rising commodity costs this week as it deliberates over potential price rises for its chocolate bars. The price of cocoa has risen by nearly 28 percent over the last year and rises in other raw material prices, such as sugar and milk, have also added to the cost of production. Cadbury warned earlier this year it may increase prices to mitigate higher commodity costs. In April, the company's confectionary business reported a seven percent increase in first-quarter sales, the biggest jump for a decade, with UK sales seeing a rise of three percent.

CHLORIDE ATTRACTS A MYSTERY SUITOR

Sources say that Chloride (CHLD.L), which helps companies such as Barclays, BP and J Sainsbury protect their electrical equipment from power failures, has recently received an undisclosed bid approach. It is not clear which company has approached Chloride but analysts say that the most likely bidders are Eaton Corporation and Emerson Electric. Chloride is currently valued at 536 million pounds and over the past decade has grown rapidly, with several acquisitions including AST in France, Ascor Power in Singapore and Masterpower in Aberdeen.

The Observer

ANGER AT SHELL'S GOLDEN HANDCUFFS

Royal Dutch Shell (RDSa.L) is facing a showdown with investors over its plans to pay three million pounds to directors so they stay with the oil giant for three years. Shell is giving shares equivalent to their annual salary to finance director Peter Voser, exploration and production director Malcolm Brinded and gas and power director Linda Cook. One investor said the payments were pointless: "I have not seen a business it works in. The executives still leave." Corporate governance monitor PIRC is also recommending that its members vote against the remuneration report.

SAINSBURY'S CHIEF COULD SCOOP NINE MILLION POUNDS

The chief executive of Sainsbury's (SBRY.L), Justin King, is expected to receive a bonus of nearly nine million pounds in cash and shares if all the targets in a three-year bonus scheme linked to growing sales and profits have been achieved. It is expected Sainsbury's will report a 30 percent jump in profits to 485 million pounds this week and staff at the retailer will share a bonus pot of more than 50 million pounds. In 2005, King set out to increase sales by 2.5 billion pounds, and he has more than achieved that, boosting turnover by 2.7 billion pounds over three years.

HSBC TO REVEAL FIVE BILLION DOLLARS OF FRESH WRITE-OFFS

It is expected HSBC (HSBA.L) will announce on Monday it is writing off a further 4.6 billion dollars against mortgages, credit cards and other loans to indebted U.S. consumers. This would bring the total amount of write-offs over the last 15 months to almost 17 billion dollars. Some analysts believe there could be even more write-offs to come with Keefe Bruyette & Woods' analyst James Hutson predicting a further 15 billion dollars worth over the year. Despite the huge write-offs, HSBC's profits are expected to be ahead of last time, reflecting a strong performance in its Asian business and some market share gains in the UK.

The Independent on Sunday

OFFERS OPEN UNTIL JUNE AT BRITISH ENERGY

The results of British Energy's BGY.L search for a buyer will not be announced until at least next month. French energy giant EDF (EDF.PA) was the only group to bid by last Friday's deadline, but British Energy will accept late offers. It is understood EDF's bid was just below 700 pence a share, a figure which would value British Energy at around 11 billion pounds.

CITY WAITS ON RIGHTS ISSUE AT BARCLAYS

When Barclays (BARC.L) gives its interim trading update on Thursday it is expected to disclose whether it plans to go ahead with a rights issue. A dramatic rise in write-downs linked to the credit crunch may force the bank to tap shareholders for cash. Analysts have predicted Barclays will need to raise around five billion pounds to align its capital ratios with those of other European banks. The bank has already been forced to write-down 1.3 billion pounds worth of assets because of the credit market turmoil. Shares closed down 2.48 percent on Friday reflecting predictions of the possible rights issue

AFTER TERMINAL FIVE, BRITISH AIRWAYS SEEKS NEW OPERATIONS SUPREMO

Whitehead Mann has been hired by British Airways (BAY.L) to search for a new chief operating officer to replace Gareth Kirkwood and David Noyes, the two directors who lost their jobs after the T5 fiasco at Heathrow. Whitehead Mann's head of board practice, Carol Leonard, is leading the search for a heavyweight industrialist who can combine operations with customer services.

The Mail on Sunday

GAS BILLS MAY RISE 30 PERCENT

On Monday, British Gas will warn householders that annual gas bills may rise by as much as 30 per cent next winter. The rise, the result of soaring wholesale gas prices, would push the average household energy bill to more than 1,200 pounds a year. Forecast wholesale prices for next winter put gas at 85 pence a therm. Last winter it was 47 pence. The wholesale price of gas is rising because the UK is forced to import more rather than rely on supplies from the North Sea.

TRAVELODGE IN 200 MILLION POUND SHOPPING SPREE PLAN

Travelodge is planning an aggressive programme of acquisitions which will target struggling three and four-star hotels which may be suffering from the credit crunch. The budget hotel chain will have a 200 million pound war chest to pick off mid-market hotels and convert them to the Travelodge brand. The programme follows the collapse of a planned merger with rival Premier Inn.

VODAFONE MAY DITCH BT FOR TISCALI

Industry sources say Vodafone (VOD.L) is planning to make a partnership proposal to Carphone Warehouse (CPW.L) if the retailer gains control of Tiscali. The partnership may see BT (BT.L) dropped as Vodafone's main partner for providing broadband to consumers, or even see BT dropped as the major source of Vodafone's telecoms infrastructure in the UK. The move would come as a blow to BT's outgoing chief executive, Ben Verwaayen, who on Thursday will deliver his final annual results since taking over from Sir Peter Bonfield in 2001.

Prepared for Reuters by Durrants.