PRESS DIGEST - Financial Times - June 26

The Financial Times

PRIVATE SECTOR WELCOMES "RIGHT TO BID"

The government's bid to open up the operation of the welfare system to offers from outside contactors was "warmly welcomed" by the private sector on Wednesday. But industry executives expressed their doubts over implementation and argued that the proposal should be backed by funds, resources and political determination. One executive said: "In principle it looks radical but I'm not sure whether it will work yet and whether it makes sense to do it this way." Voluntary sector providers said the proposals addressed the possibility of their innovative ideas being "plagiarised" by Whitehall and then put out to tender elsewhere.

INFLATION HITS SHOPPING HABITS

As rising inflation hits consumers and alters their shopping patterns, a new survey by the CBI has found trading conditions remained tough in June. Andy Clarke, Asda's (WMT.N) retail director, said on Wednesday the supermarket's customers were buying more value oriented products in the week before pay and cheaper food on weekdays. The CBI warned that motor traders are expected to report a steep drop in sales, hit by higher petrol prices.

BINGO GROUPS HAIL GAMING CONCESSION

The government has announced plans to allow bingo operators to double the number of high-stakes gaming machines in their venues. Sports Minister Gerry Sutcliffe proposed bingo halls should have eight machines, instead of four, offering a maximum 500 pounds prize for a one pound stake, but repeated his view on the dangers of addiction. Sutcliffe, who is expecting a report from the Gambling Commission on problem gambling from machines in July, said bingo clubs "fulfil an important social function" and "for many people, especially older and retired women, bingo is the main or sole leisure pursuit outside of the home".

AUTODESK OUT OF FLOMERICS CHASE

Autodesk's (ADSK.O) decision not to launch an offer for Flomerics FLO.L drove the engineering software group's shares down to 95 pence in early trading on Wednesday. The shares in the AIM-listed company closed at 101 pence, lower than last month's 104 pence on offer from Mentor Graphics (MENT.O), the electronic design specialist that holds a 29 percent stake in the company. Flomerics repeated on Wednesday that Mentor's bid, whose closing date is next Wednesday, is "wholly inadequate" and suggested investors reject it.

ASSURA LOOKS TO NHS FOR GROWTH

Assura Group (AGRP.L) is focusing on the opportunities arising from the growing role of the private sector in the National Health Service, after posting a serious fall in profits due to heavy investing in pharmacies and joint ventures with GPs. Pre-tax profit in the medical services company for the 15-month period to March 31 was down by a third to 12.6 million pounds, although revenues in the same period reached 40.7 million pounds, 152 percent up compared to the year before. Chief executive Richard Burrell said: "We're investing in a very significant opportunity, and we're expensing all of our growth."

CUTTING QUESTIONS AT MOSS BROS MEETING

Moss Bros (MOSB.L) chief executive Phillip Mountford faced hostile questioning from shareholders at the menswear retailer's annual meeting on Wednesday. He was told to put "clear water" between the company and Baugur, the Icelandic investment group that cancelled a planned 40 million pound takeover bid for Moss Bros. Mountford acted as chairman at the meeting, taking the place of the recently departed Keith Hamill. Four candidates have been lined up for the post, with several shareholders and directors expressing a belief the company could unite under a new chairman.

LCH.CLEARNET TO TAKE HKMEX WORK

LCH.Clearnet has agreed to work for the Hong Kong Mercantile Exchange, a new Asian energy exchange that aims to provide risk management contracts to largely Chinese clients. The London-based clearer has been seeking new business as it prepares for the loss of ICE Futures Europe in July. Liffe, the futures arm of NYSE Euronext, has also re-arranged its clearing with LCH.Clearnet and plans to transfer some of the functions to its own planned London operation.

EXPRO COURT HEARING ADJOURNED

The first court hearing to approve the 1.8 billion pound takeover of oil services company Expro International EXR.L by Umbrellastream has been adjourned for a day. The move was to allow those opposing its immediate sale to make their submissions. U.S. hedge fund Sandell Asset Management has formally joined Mason Capital in opposing the arrangement, while U.S. oil services group Halliburton (HAL.N) failed in its attempt to derail the deal when its last-minute bid was rejected by Expro last Friday.

RENOLD TO BUY INDIAN SUPPLIER

Industrial chain maker Renold (RNO.L) is raising 5.3 million pounds to fund its acquisition of L G Balakrishnan, India's leading chain supplier. Renold will pay five million pounds for a 75 percent stake in the business with an option to buy out the remaining 25 percent stake after two years. The deal ties in with Renold's strategy of increasing manufacturing in what Renold terms "low-cost countries" and follows its acquisition of a 90 percent stake in Chinese chain maker Hangzhou Shanshui last June for 2.4 million pounds.

VT SET TO EXPAND AIR TRAINING ROLE

VT Group (VTG.L), the defence and support services company, has been named as the preferred bidder to provide a fleet of light aircraft for the training of new recruits in the Armed Forces. The deal is worth up to 150 million pounds a year and will require VT to provide up to 60,000 hours of flying a year. The contract, to be signed later in the year, expands an arrangement with the Royal Air Force that has been in place since 1999. Chief executive Paul Lester said: "The provision of initial flying training will enable us to extend our role in supplying and supporting military assets."

Prepared for Reuters by Durrants.