The Financial Mail
Cadbury Schweppes CBRY.L is set to face angry questioning from unions following a leaked email that applauded a massive sales increase. This came just weeks after the confectionery giant announced 700 job losses. Indeed, the memo said sales growth for October was “nothing short of staggering”. The Unite union said the email exposed “corporate greed.” The email pointed to the success of the group’s autumn Dairy Milk television advertising campaign as a significant factor in the sales hike, along with the relaunch of Wispa and impressive sales of Creme Eggs.
Irish-owned pay-television broadcaster Setanta is poised to disclose that one million premium customers are subscribing to its sports channel, though the number fails to include those with access via a Virgin Media package, which delivers returns that are considerably less than viewers who pay direct. The group, which paid 392 million pounds for the rights to screen live Premier League games for three years from last August, requires around two million premium Setanta Sports subscribers to break even.
RBS “TWO BILLION POUNDS WRITE-OFF”
Analysts expect Royal Bank of Scotland (RBS.L) to write-off around 1.8 billion pounds -- a figure far higher than earlier estimates of between 500 million pounds and one billion pounds. This is because of credit derivatives on its books, including exposure to the U.S. subprime mortgage sector, and most likely loans pertaining to private equity buyouts. The bank will also issue a separate statement regarding ABN Amro, acquired earlier this year, which may include details of the plans it has to break-up the business with its acquisition partners, Fortis and Santander.
The Sunday Times
GlaxoSmithKline (GSK.L) is set to offer president of U.S. pharmaceuticals Chris Viehbacher and president of pharmaceutical operations David Stout two million pounds retention packages and seats on the board after they missed out on landing the chief executive’s role, which instead went to external candidate Andrew Witty. Shares would be awarded to Viehbacher and Stout over two to three years, with the pair likely to trouser a small cash payment as well. The number of executives on the board would subsequently double to four, a number that investors have proposed for some time.
Allan Leighton is set to surrender his role as chairman of British Home Stores after Christmas to pursue his other business interests, including Royal Mail [GBPO.UL] which he runs and BSkyB BSY.L where he is a non-executive director. It was revealed earlier this year Leighton had been in secret talks to acquire BHS from owner Sir Philip Green, but while he had several banks in place to acquire the fashion retailer the negotiations came to nothing. It is not thought the discussions had any bearing on Leighton’s departure.
Hit Entertainment has put Guinness World Records on the market at a price of close to 60 million pounds in order to focus on developing children’s characters such as Bob the Builder and Barney the Dinosaur. Corporate finance boutique Jefferies has already received significant interest in the unit. Guinness World Records, sold by Diageo in 1997, was first published in 1955 and has since sold 110 million books across the globe, translated into 37 languages. Hit, parented by Apax Partners, declined to comment.
The Sunday Telegraph
M&B “COULD GO UNDER IF IT SPINS OFF PROPERTY”
One of Mitchells & Butlers (MAB.L) leading shareholders has said the group could fold if it pursues its plan to spin-off its five billion pounds property portfolio. The investor will write to directors, questioning the wisdom of placing the group’s property in a separately listed real estate investment trust - a move that would incur massive rental charges. The investor said:: “Our message to the company is that we need to clearly understand why this is such a good idea. We think they have got this wrong and the operating company could fail. There would be the property company but not the operating company.” The shareholder, who asked not to be named, is also concerned the group’s board has bowed to pressure from 19 percent shareholder Robert Tchenguiz.
It is thought Lion Capital is the latest private equity group to withdraw from the 450 million pounds auction for Pret a Manger, amid fears that a U.S. recession will hinder the retailer’s plans to roll-out stores in the country and that founders Sinclair Beecham and Julian Metcalfe will not reinvest in the group. Bridgepoint is now the only known suitor interested in the sandwich chain, despite City sources saying that an unnamed American, backed by Goldman Sachs, could provide competition. It wants Beecham and Metcalfe to demonstrate commitment to Pret by reinvesting funds in the chain.
Goldman Sachs has been appointed by Sir Richard Branson to lead the planned flotation of Virgin Active, having completed a beauty parade of around 10 potential advisers for the initial public offering. The IPO is provisionally slated for the second half of next year and could value the chain at around one billion pounds.
The Independent on Sunday
Ozwald Boateng is to open a new flagship store on Savile Row in the next few weeks amid aggressive international expansion plans that would see 30 new outlets launched over the next three years, with America, the Middle East, Russia, India, China and Singapore having been earmarked as locations. Savile Row tailors will be glad of Boateng’s presence, having been subjected to rental increases of 50 percent over the past decade, as well as tougher competition in the form of cheap Asian-made suits and expensive made-to-measure designer clothing.
HSBC (HSBA.L) has bowed to pressure from activist shareholder Knight Vinke, which questioned non-executive directors’ independence and accused the bank of underperformance, by recruiting Carrefour chief executive and chairman Jose Luis Duran as a new non-executive director. But the appointment is unlikely to appease Vinke.
S&N UNDER PRESSURE TO STRIKE DEAL WITH RIVALS
Scottish & Newcastle SCTN.L shareholders are pressurising the firm to enter into discussions with Carlsberg (CARLb.CO) and Heineken (HEIN.AS), fearing the former’s stock price could plummet if it fails to speak to suitors. It is thought institutional investors Black Rock, Schroders and Scottish Widows last week sold significant holdings in the brewer amid concerns that should S&N fail to conduct talks interested parties will either drop their interest or launch a hostile bid.
Former Prudential boss Jonathan Bloomer is heading Cerberus’ [CBS.UL] bid for Northern Rock NRK.L NRK.L, tabled late on Friday night. The U.S. private equity firm’s proposals are thought to include an upfront repayment of loans to the value of just eight billion pounds -- a sum that the UK bank’s advisers, Citigroup, Merrill Lynch and Blackstone, are trying to persuade the prospective suitor to lift. Rival bidder JC Flowers has proposed revised terms that would see it immediately repay 15 billion pounds of the 25 billion pounds that Northern Rock has borrowed from the taxpayer since September.
The Unite union has urged 3,100 of its members, who are cabin crew at Virgin Atlantic [VA.UL], to vote in favour of strike action when they are balloted on Monday over pay. Staff say they are underpaid when compared to some of the airline’s rivals. Should industrial action be effected, it would take place in January and could mean a couple of months of frustration for travellers. This is because Unite’s 5,000 BAA workers will decide whether to strike on the same day as the Virgin ballot -- Dec. 20. Should the BAA workers decide to strike, the first date that air passengers would face disruption is 27 December.
Prepared for Reuters by Durrants