Welcome to today's round-up of business news from The Times: what we're
saying, what they're saying, what you should be thinking
Wednesday, October 24, 0730 BST
HEADLINES
Convicted insurance chief faces jail
BP profits plunge 45% despite oil prices
Nike agrees £285m Umbro deal
S&N and Carlsberg head for courts
MPC expert warns of buy-to-let dangers
Volkswagen law ruled illegal
Russia's Soviet-style food price controls
TOP STORIES IN FULL
Convicted
You can't insure against jail time. Michael
Bright, the founder and former chief executive of Independent Insurance,
faces up to ten years in jail after a jury found him guilty of conspiracy to
defraud, The Times reports.
Together with Dennis Lomas, his former finance director, and Philip Condon,
deputy managing director, Bright was convicted of turning what was once the
UK's largest insurance company into a collapsed business "riddled with
fraud". Independent,
worth £1 billion in 2000, collapsed the following year with the loss of more
than 1,000 jobs.
He hit the nail on the head in an interview in 1999. "My grandmother
always thought insurance salesmen were the crooks of the earth."
Oil slip
BP
has revealed the cost of one of its worst periods in recent memory, says The
Times. The oil giant reported a 45 per cent plunge in quarterly profits
despite a run of near-record oil prices.
Third-quarter figures, the first full-quarter under Tony Hayward, the new
chief executive, bore the scars of a series of delays, higher costs,
refinery shutdowns and the closure of a crucial pipeline. The result
prompted some wit from Citigroup: "On a scale of one to dreadful, the
results were not bad."
As Mr Hayward continues his clear-out, The Wall Street Journal says
that the company has agreed to pay $303 million (£148 million) to settle
civil charges and avoid criminal prosecution in the US for allegedly
manipulating and cornering the propane market in 2004.
Kicking goals
Nike
is to somersault Adidas to become the biggest brand in world football if its
£285 million ($584 million) bid for the UK's Umbro is successful.
The Financial Times reports that the biggest sportswear company on
Tuesday outlined an agreed 195p-a-share cash offer for Umbro, whose rhombus
logo adorns the England football team's shirt.
With the prospect of competition inquiries in several markets, both Nike and
Umbro have underlined the difficulty in defining the market for football
products. Estimates show that in 2006 Adidas had a 35 per cent share of
football shirts and equipment, Nike had 32 per cent, Umbro 8 per cent and
Puma 5 per cent.
Sobering move
The battle for control of Scottish
& Newcastle could be heading to the law courts, says The Daily
Telegraph. The UK brewer claims Carlsberg has broken the terms of a
joint venture between the two companies.
S&N says it had given Carlsberg notice of breaches by the Danish brewer of
the agreement governing the companies' ownership of BBH, their Russian joint
venture.
The move could stop in its tracks a plan by Carlsberg and Heineken, the Dutch
company, to table a joint £7 billion bid for Britain's biggest brewer. It
could also hand total control of BBH, the biggest brewer in Russia and the
main driver of growth at S&N and Carlsberg, to S&N.
House of pain?
The Bank of England's leading property expert has given warning that problems
in the buy-to-let
sector could provide the trigger for a housing market correction, The
Daily Telegraph reports.
Kate Barker, one of the Monetary Policy Committee's longest-serving members
and an adviser to Gordon Brown on the property market, issued her sternest
warning yet on the property market, saying people's expectations for house
prices may be due a "major change".
However, she says the credit crunch will probably not cause the housing market
to turn, suggesting she is not in favour of an emergency cut in interest
rates next month.
Halt
The European Union's highest court has said that a German law protecting
carmaker Volkswagen
from takeovers is illegal.
Under the "Volkswagen Law" any shareholder in VW could not exercise
more than 20 per cent of voting rights, even if their stake in the firm was
bigger. But the European Court of Justice said that the law discouraged
foreign investors from taking a stake in Volkswagen.
Porsche, which owns 31 per cent of VW, declined to say whether it would now
move to take the wheel at its compatriot. Wendelin Wiedeking, Porsche's
chief executive, said that for the time being his company was "naturally
very interested in being able to fully exert our voting rights" in VW.
Economic potato
Russia's turn with the hot potato of surging agricultural prices. The Financial
Times says that the Putin administration - facing parliamentary
elections in December - is introducing Soviet-style price controls on some
basic foods.
The country's biggest food retailers and producers are expected on Wednesday
to sign off on a deal to freeze prices at October 15 levels on selected
types of bread, cheese, milk, eggs and vegetable oil until the end of the
year.
China has also agreed to food price controls and Western countries are not
immune. Italian consumer groups organised a pasta boycott last month in a
protest over prices.
MARKETS
FTSE 100 (Tuesday close): up 54.70, or 0.9%, at 6,514.00
Dow (close): up 109.26, or 0.8%, at 13,676.23
S&P 500 (close): up 13.26, or 0.9%, at 1,519.59
Nasdaq (close): up 45.33, or 1.7%, at 2,799.26
Nikkei (latest): up 45.23, or 0.3%, at 16,495.81
Hang Seng (latest): up 363.91, or 1.2%, at 29,740.77
Sterling (latest): $2.0497
Oil (latest): West Texas crude down 29 cents at $84.98
Gold (latest): up 20 cents at $763.30
NEW YORK
Wall
Street rose the most in two weeks after better-than-expected earnings
from Apple and American Express eased concerns that the
housing slump has depressed consumer spending.
Apple rose the most since January after reporting record sales of Macintosh
computers. American Express, the third-largest US credit-card network,
gained on higher charges by wealthy customers. Amazon.com rallied to
an almost eight-year high before reporting profits that were lower than some
investors anticipated. The shares fell 9.6 per cent after the close of
exchanges.
The broad-based S&P 500 index added 0.9 per cent, the benchmark Dow Jones
industrial average gained 0.8 per cent and the technology-laden Nasdaq rose
1.7 per cent.
ASIA
Asian
stocks advanced, led by Japanese drugmakers and mining companies, after Chugai
Pharmaceutical - the Japanese unit of Roche - reported higher profit and
metals prices rose.
Honda, which reports second-quarter profits on Thursday, led gains by
companies relying on US sales after AT&T and Amazon.com reported
increased earnings. BHP Billiton rose after a measure of six metals
including copper climbed the most in a week.
The Morgan Stanley Capital International Asia-Pacific Index had risen 0.9 per
cent to, while Japan's Nikkei was up 0.3 per cent in intraday trading.
Paul Larter
paul.larter@thetimes.co.uk
LONDON
Some bid rumours just refuse to die. Talk that recruiter Hays is a
takeover target for Swiss rival Adecco is one of those.
“Recruitment is an industry that needs to consolidate,” said one trader “and
Hays is cheap.”
Adecco has never ruled out a bid, The last time bid speculation surfaced at
the start of this month - with an 180p bid price - it very carefully refused
to comment but said that it was looking at acquisitions in selected areas of
Europe, Japan and the US. Another contender could be US group Manpower,
which is thought to have run the rule over Hays a few years ago.
Similarly, talk that Enodis, the restaurant kitchen equipment maker,
was being targeted stayed on the front burner for a second day. It added
another 3p to 214.5p on strong volume following its 12 per cent rise on
Monday. US rival Manitowoc, which aborted a bid last year, is seen as a
possible candidate.
Rank Group was another mid cap stock buoyed by bid talk, up 2p at
100.5p, on rumours that its recent profit warning may have reignited
interest from William Hill and possibly Ladbrokes. But why would anyone
would want to buy Rank now, with the smoking ban throwing an impenetrable
fog over bingo earnings?
When William Hill’s chairman Charles Scott was against buying Rank when it
last looked at a deal and he is now Hill’s acting chief executive. And
Ladbrokes does not want to get back into casinos having sold them a few
years ago. Some shareholders are believed to be incensed at the overly
positive outlook given by chief executive Ian Burke at its interims in
August, with some calling for him to consider his position.
The FTSE-100 meanwhile bounced back 54.7 points to 6514. “Armaggedon appears
to have been postponed,” summed up one dealer drily. House builders and
mortgage lenders led the way helped by soothing remarks from Bradford &
Bingley, up 24.5p to 278.5p, on its website that it had raised £1.8 billion
since September 14 despite the credit crunch.
Alliance & Leicester rose 23p to 750.5p and HBOS, owner of
Halifax, was up 18p at 843.5p. Northern Rock followed the pack, up
4.75p to 189.75p. Housebuilders firmed on Persimmon chairman John White’s
public declaration that he was beginning a share buyback to exploit the fall
in share price. It rose 39p to 988p and Barratt Developments was up
18.5p at 672p.
Berkeley Group was lifted 63p to £16.49 after somene bought 2.5 million
shares or 2 per cent at £16.36. Middle Eastern investor SAAD already owns 29
per cent and managing director Tony Pidgley last month bought 1.95 million
shares.
Robert Lindsay
robert.lindsay@thetimes.co.uk
AGENDA
INTERIMS
Deutsche Land
GlaxoSmithKline (Q3)
Home Retail Group
BP Marsh & Partners
Reckitt Benckiser (Q3)
AGMs
Global Marine
NEW BUSINESS FIGURES
Friends Provident (Q3)
ECONOMICS
DMO auction of index-linked gilts maturing 2037 (1100 BST)
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