Southern Cross SCHE.L, Britain’s biggest care homes operator, is set to begin negotiations with its care home landlords with the aim of cutting down its 200 million pound annual rental bill. Jamie Buchan, Southern Cross chief executive, has enlisted investment bank Morgan Stanley and the law firm Clifford Chance to begin the negotiations, although the outcome will depend on the attitude of Royal Bank of Scotland (RBS.L) and Lloyds Banking Group (LLOY.L), both of which are big lenders to Southern Cross’s landlords. Ten days ago Southern Cross rejected a takeover approach from private equity firm TowerBrook Capital Partners. Shares in Southern Cross closed on Friday at 35 pence.
Willie Walsh, British Airways’ BAY.L chief executive, has identified 12 airlines as possible targets once the merger with Spanish carrier Iberia IBLA.MC is complete. Speaking in Mumbai, Walsh outlined the strategy for the new holding company, which will be known as International Airlines Group, although the two flag carriers will continue to trade under their familiar names. Walsh said: “The ambition of International Airlines Group is to consolidate this industry further and that is why we didn’t call the combined company something like BA-Iberia.” While the merger is expected to be completed at the end of the year, Walsh refused to give details of the list. Analysts speculate the targets could include the likes of Qantas, Cathay Pacific and LAN.
JD Wetherspoon (JDW.L), the pub chain, is expected to confirm the location of its first pub in the Orkney Islands this week. A spokesman for Wetherspoon said it has yet to obtain planning permission but added: “We have identified a site in the Orkney Islands and would love to open a pub there. We believe our style of pub will appeal to the people living there, as well as holiday-makers.” The group’s latest financial report is eagerly anticipated amid speculation that annual sales have gone through the one billion pound barrier for the first time in its history.
The Daily Telegraph
U.S. AUTHORITIES SEIZE BP‘S OIL BLOWOUT PREVENTER
BP’s (BP.L) blowout preventer, which should have prevented the Gulf of Mexico oil disaster, has been seized by U.S. authorities. According to Admiral Thad Allen, who is in charge of the U.S. government’s response to the spill, the preventer will be under guard and inspection by the U.S. Justice Department as “evidence material that’s been required by the joint investigative team”. BP is currently facing 300 private civil lawsuits as a result of the disaster and could also face a prosecution from the Justice Department. BP’s own investigation report into the incident, produced by Mark Bly, head of group safety and operations, is due to be published shortly.
A group of disgruntled institutional investors has threatened to issue a joint letter pressing for the resignation of Harvey McGrath, the chairman of insurer Prudential (PRU.L). The investors, who are still angry over the Pru’s 450 million pound bill for advisory fees relating to its collapsed 35 billion dollar bid for rival AIA Group, say their concerns have not been addressed. One investor said: “It’s simply not on to spend 450 million pounds and then call it a useful exercise.”
WATER CHIEF‘S PAY LEAPS BY ONE THIRD
It has emerged that Philip Green, chief executive of water company United Utilities (UU.L), has seen his pay increase by 37 percent despite a programme of cost savings at the firm. Green’s total pay for the year to the end of March rose from 1.27 million pounds to 1.75 million pounds. He received a bonus of 924,900 pounds, 115.9 percent of his salary of just under 800,000 pounds. In 2009, his bonus was 471,000 pounds. United Utilities has cut the equivalent of 500 full-time jobs over the past twelve months. It declined to comment on Green’s remuneration.
WATERSTONE “KEEN TO TAKE BACK CONTROL” OF HIS BOOKSTORES
As entertainment retailer HMV HMV.L prepares to deliver a trading update this week, the founder of Waterstones is poised to offer 100 million pounds or more for the bookshop chain. Analysts at bank Nomura believe that HMV, which acquired Waterstones in 1998 for 300 million pounds, will report that there continues to be ongoing sales pressures at the book chain, with a marginal let-up in decline to four percent in the first quarter from 4.8 percent over the previous three months. According to sources, Tim Waterstone is eager to regain control of the bookshop he founded despite having failed to buy back the chain in 2006 for 280 million pounds.
Responding to a directive by Chinese officials, state-owned energy and fertiliser firm Sinochem has started to meet bankers at investment houses including HSBC (HSBA.L) to identify strategies to scupper rival BHP Billiton’s (BLT.L) 25 billion pound move to acquire Potash Corporation (POT.TO). According to a report in the Wall Street Journal on Thursday, one option that has been discussed by HSBC and Sinochem involves partnering with China’s 300 billion dollar sovereign fund to present a more competitive bid than BHP. The move by Beijing to encourage state-owned companies to try and topple a BHP-Potash union is thought to underscore the importance China places on the supply and pricing of the Potash- produced crop nutrient.
Haymarket Financial has emerged as a new contender in British banking, with reports over the weekend that Lord Rothschild, Sir Ronald Cohen and Future Fund will be investing 375 million pounds in the lender. The bank is expected to focus its services on “vanilla lending”, which will include serving medium-sized businesses that have an enterprise value of between 100 and 500 million euros. George Soros’s private equity firm TowerBrook will be the bank’s principal backer.
John Lewis [JLP.UL], the department store, is expected to report pre-recession level half-year profits later this month. The figures are boosted by the performance of its homewares department which showed a 17 percent increase on 2009 levels in sales in the six months to the end of July. The clothing business is the fastest-growing division and last month reported an increase in sales of 17 percent. Growth at the electrical division was 2.2 percent. Elsewhere, Marks & Spencer (MKS.L) has also performed well, gaining market share in all fashion departments, with its Per Una lingerie line and its suits range among the top sellers.
PricewaterhouseCoopers, the professional services firm, paid its 820 UK partners 759,000 pounds each last year. This is lower than the previous year’s figure of 777,000 pounds, but higher than the 757,000 pounds paid during 2007’s boom. The company said it recruited 1,750 new employees and appointed 57 new partners during the period. It also intends to employ a further 800 staff before next summer. Chairman Ian Powell said the company donated 8.1 million pounds in cash, support and time to community projects. He also said the coalition government should continue with its investment programme to increase growth that would benefit the UK’s long-term prospects.
Prepared for Reuters by Durrants