PRESS DIGEST - British business - April 13

The Sunday Times

M&B TASTE FOR SPIRIT

Mitchells & Butlers (MAB.L) has held talks to buy part of Punch Taverns' (PUB.L) estate. The pubs group wants to buy Spirit, and the two sides met last week. M&B will raise funds to buy Spirit by selling a minority stake in itself to a private-equity firm. It has already received proposals from three groups -- Bain Capital, Permira and a combination of CVC and Blackstone.

SCOTTISH RETAILER OSSIAN SINKS UNDER 25 MILLION POUND DEBT

Ossian Retail Group is poised to go into administration this week, and the move is likely to result in the company being broken up, with its brands and 120 stores sold to various buyers. A distressed-debt investment specialist, Agilo, has initiated the move, and had previously bought up Ossian's entire 25 million pound debt last week. Agilo is understood to be confident of keeping most of the company's 2,500 jobs, despite taking such a dramatic step.

BT'S NEW CHIEF THROWS DOWN GAUNTLET TO OFCOM

Ian Livingston is challenging Ofcom to make sweeping changes to BT's (BT.L) universal service obligation (USO) before he will commit to investing billions of pounds in a new fibre-optic network. Livingston said: "We will not spend material amounts of money that will guarantee that we will lose money for shareholders."

The Sunday Telegraph

BA INVESTOR CALLS BROUGHTON TO TALKS ON HEATHROW CRISIS

Standard Life Investments has demanded an urgent meeting with British Airways' (BAY.L) chairman, Martin Broughton, over the calamitous opening of Heathrow's Terminal 5. Broughton will meet SLI's head of UK equities, David Cummings, and the fund manager's head of corporate governance, Guy Jubb, on Monday to try to persuade them that he is still in control of the board. The fund managers are due to meet the airline's chief executive, Willie Walsh, on Tuesday to express their concerns.

PETCHY BUILDS SECRET STAKE IN PENDRAGON

Jack Petchey has amassed a secret stake in the UK's largest car dealership, Pendragon (PDG.L). Petchey is understood to have acquired a 13 percent stake in Pendragon using controversial derivatives known as contracts for differences (CFDs). The revelation will spark speculation Petchey plans to pressurise the Pendragon board to realise value from its freehold property portfolio or consider a merger with another major player in the sector.

BINGO OPERATOR GAMBLES ON CASH INJECTION

Hermes Private Equity has been forced to inject millions of pounds into one of Britain's largest operators of bingo clubs, Mayfair Gaming, underlining the "perfect storm" facing companies across the troubled industry. Hermes has spent over 10 million pounds to try to shore up its investment in Mayfair. The move comes as Alchemy Partners prepares to hand control of its Buckingham Bingo group back to Barclays.

The Observer

TESCO SAYS U.S. STORES ARE NOT A FAILURE

The week, Sir Terry Leahy, the chief executive of Tesco (TSCO.L), will try to silence critics who say its new American chain Fresh & Easy has been a failure. The group's annual results on Tuesday will give some details of the performance, but will stop short of giving a sales update. The supermarket is due to report profits up over 250 million pounds at 2.75 billion pounds.

CENTRICA TO BE FROZEN OUT OF NUCLEAR BID

European utility giants vying for control of British Energy BGY.L are set to shun Centrica (CNA.L). Although the sale process is in the early stages, an 11 billion pound auction for the nuclear generator is narrowing down to a race between EDF (EDF.PA) and RWE (RWEG.DE). It understood Centrica could play the role of "kingmaker" in the takeover, as it could be a junior partner in a joint bid with EDF or RWE to keep British Energy "British". However, the European utility companies currently plan to proceed on their own as they do not need to team up with Centrica on any bid.

SIR ADRIAN HASN'T THE TIME, BUT HE HAS THE ENERGY

Sir Adrian Montague, chairman of Friends Provident FP.L, is fending off a bid from JC Flowers. As the chair of British Energy BGY.L, he will also play a role in the future of nuclear and energy security for Britain. Montague has been criticised for having too much responsibility on his plate, but the lack of talent means people like him are in heavy demand.

The Independent on Sunday

GREEN SEEKING AN EXIT FROM BHS TO FOCUS ON TOPSHOP

Sir Philip Green is looking for buyers for BHS to concentrate on Topshop, which is expanding into the United States with its Kate Moss clothing range. A source close to the fashion tycoon said: "Sir Philip has talked to a number of people about buying BHS. He's caught in a bit of a problem -- he wants to get out of BHS and spend more time on Topshop, which is going great guns."

PRUDENTIAL LAUNCHES SEARCH FOR CHAIRMAN TO REPLACE CLEMENTI

Sir David Clementi will retire from Prudential (PRU.L) in two years time, and the company has begun the search to find a chairman to replace him. Whitehead Mann has been appointed with the task of drawing up a shortlist of candidates for a selection process that could take more than a year. Clementi is understood to be keen to hand over the reins to concentrate on other activities, including his interest in City livery companies.

BMI IN PROTEST OVER AIRPORT LANDING CHARGES

One of the UK's largest airlines BMI has told the Civil Aviation Authority that it is seeking a judicial review of the CAA's decision to push through rises in landing charges at Gatwick and Heathrow airports. Last week, a letter was sent by BMI telling the authority that it wants a review of the process by which the CAA granted BAA massive price increases.

The Mail on Sunday

GRAN TRIES TO BRING THE HOUSE DOWN ON TESCO BOSS

Dot Reid, 58, has submitted a planning application to bulldoze the luxury mansion of Tesco (TSCO.L) boss Sir Terry Leahy -- because of the retailer's plans to flatten her house to make way for a new supermarket. Tesco said: "This is clearly a publicity stunt and has no chance of ever being implemented. The only outcome would be to waste council time, effort and taxpayer's money." Reid is joined by about 500 people, the supporters of Kirkby Residents Action Group, who are against Tesco's new planning scheme.

CRUNCH STOPS TAKEOVER OF BUTLINS OWNER

The owner of Butlins, Bourne Leisure, had been in talks with Candover, the private equity giant, regarding a multi-million pound deal to buy one of Britain's biggest holiday companies, but the proposed plan has fallen victim to the credit crunch. Candover had asked for European Commission approval for the deal, but the request was withdrawn ahead of this week's EC deadline because of the slowdown in consumer spending in the leisure market.

Prepared for Reuters by Durrants.