PRESS DIGEST - British business - July 14

The Times

THE CO-OP READY TO RECAPTURE THE MAGIC OF THE SIXTIES WITH 1.6 BILLION POUND SOMERFIELD DEAL

The Co-operative Group is close to finalising its long-awaited 1.6 billion pound takeover of Somerfield, its springboard back into the supermarket big league. The deal would trigger windfalls for property tycoon Robert Tchenguiz, who holds a 30 percent stake in Somerfield, as well as his fellow shareholders Barclays Capital, Apax and Kaupthing, the Icelandic bank. Somerfield's 900 stores would take Co-op's portfolio of supermarkets and convenience sites to more than 3,100 and bring the enlarged group annual sales of more than 10 billion pounds.

QINETIQ WINS BOEING CONTRACT TO DEVELOP UNMANNED AERIAL VEHICLES FOR PENTAGON

British defence research company QinetiQ (QQ.L) has won a key contract with Boeing to develop unmanned aircraft for the U.S. government. It will announce on Monday that Boeing (BA.N) has chosen QinetiQ for the project for the U.S. Defence Advanced Research Projects Agency to develop Vulture, a pilotless endurance vehicle for use in civil and military applications that could eventually replace conventional satellites. QinetiQ has previously developed a solar-powered UAV prototype called the Zephyr, an unmanned ultra-lightweight aircraft which is launched by hand.

CBI DEMANDS PLANNING CHANGES TO AVOID ENERGY AND TRANSPORT CRISES

The Confederation of British Industry has said Britain's energy security and the 100 billion pounds of commercial money needed to deliver it could be jeopardised should the Planning Bill fail to become law. It also believes that if the present planning system is allowed to continue the economy will be further hit by obstacles to the development of the transport network. The bill, which faces its second reading in the House of Lords on Monday following a difficult passage through the Commons, would greatly simplify the planning process for large infrastructure projects.

The Daily Telegraph

PETROFAC PLANT BID

Petrofac (PFC.L), the British-based oil and gas services provider, is part of a consortium with Indonesian engineering company IKPT that is the preferred bidder to build a liquefied natural gas plant in Algeria. The plant, to be constructed in the western Mediterranean port of Arzew, will have a production capacity of 4.3 million tonnes a year.

EQUITABLE LIFE DRAWS UP BIDDER SHORTLIST

Equitable Life, the UK's oldest mutual insurer, is being circled by a pack of insurance giants, including Legal & General (LGEN.L)> and Prudential (PRU.L) The former insurance leader, which at its peak had 1.5 million policy holders and was worth 26 billion pounds, has drawn up a shortlist of bidders for its remaining seven billion pound assets. The "serious contenders" are now working on revised offers and Equitable hopes to decide whether to sell itself in the autumn, sources close to the process said.

SIX PRIVATE EQUITY FIRMS GO TO NEXT STAGE OF BODYCOTE AUCTION

Half a dozen private equity bidders -- CVC Capital Partners, Montagu, Warburg Pincus, CCMP Capital, Providence Equity Partners and Clayton, Dubilier & Rice -- have made it through to the second round of the auction for the testing business of engineering group Bodycote (BOY.L), it has emerged. There are rumours that a trade buyer had also made it through to the second stage, banking sources said. Bodycote's shares closed 7.75 pence down on Friday at 174.5 pence, valuing the group at 586.2 million pounds.

The Independent

FUNDING CRISIS FORCES DAWNAY DAY TO CALL IN ADMINISTRATORS

Dawnay Day, the financial services conglomerate whose investments include clothes retailer Austin Reed, has become the latest group to fall victim to the credit crunch. It has called in administrators from Ernst & Young to conduct an emergency review of some of its businesses, having failed to raise the funds it needed to stay afloat. Dawnay carried out a 750 million pound refinancing at the start of the year but is now seeking additional capital as it struggles to cope with worsening conditions in the credit markets.

PROFIT WARNINGS REMAIN HIGH IN Q2

According to the auditors Ernst & Young, the number of profits warnings issued by UK-listed companies hit their second-highest level in seven years during the second quarter. Some 98 companies issued warnings in the quarter -- 11 percent more than in the same period last year. The extent to which large companies were suffering was substantially up on the first quarter -- the number of those with turnovers of more than one billion pounds that issued profits warnings doubled.

WATERSTONE'S IN E-BOOK DEAL

The bookseller Waterstone's, part of HMV Group (HMV.L), is preparing to launch its first reader device for electronic books, as rival Borders UK revealed strong sales for the e-book it launched in May. Waterstone's is thought to have signed a tie-in with Sony to sell the Sony Reader -- which retails for 299 dollars in the United States -- in the majority of its stores from later this year. Borders UK was the first UK bookseller to enter the e-book market offering the iLiad reader device, which retails for 399 pounds.

The Guardian

BRITISH ENERGY PREPARES TO PUSH FRENCH TO RAISE THEIR BID

British Energy BGY.L shareholders will meet this week in Scotland knowing that the battle of wills between the board and EDF (EDF.PA) over the French company's bid for BE is still unresolved. Directors of BE are understood to have let EDF know that the price it has indicated it would be willing to pay would not be enough, but the state-owned French utility is determined to maintain "price discipline", according to one source. EDF is believed to be prepared to offer more than 680 pence a share, but less than 735 pence. BE's share price closed at 697 pence on Friday.

WOLSELEY TO AXE HUNDREDS OF JOBS AFTER PROFIT WARNING

Reports over the weekend suggest that Wolseley (WOS.L), the biggest supplier of plumbing and building materials in the world, will this week issue a profits warning and announce plans to cut hundreds of jobs after suffering from the collapse in construction in Britain and the United States. The group is undergoing a 70 million pound cost-reduction programme announced in May and has already shed some of its 14,000 UK jobs.

INSURERS GIVE GREEN LIGHT TO BAA RESTRUCTURING

BAA FER.MC said on Sunday night that its refinancing plans have received a boost after a special committee of the Association of British Insurers gave the green light to a key part of the programme. Plans to move bond holders to an investment-grade ring-fenced structure secured against Heathrow, Gatwick and Stansted airports and Heathrow Express had been approved by the committee, BAA said. A meeting of bond holders will be held to consider the proposals, which involve some 5.3 billion pounds worth of bonds and are part of plans to restructure BAA's heavy debt burden after its acquisition by Ferrovial.

Prepared for Reuters by Durrants