Morning newspaper round up - 21/05/13

The Times

Gilts: U.K. Government bonds drifted lower as investors continued to chase riskier assets such as shares. All eyes were on America, where further evidence should be forthcoming about the Fed’s thinking on QE. The September gilt future settled 32 ticks lower at 117.60. In the cash market, the yield on ten-year gilts rose less than one basis point to 1.89%.

Bet of the day: Pennon’s share price has reached a high for the year, buoyed in part by a bid for another water company, Severn Trent. But cautious spread-betters were selling ahead of annual results on Thursday. Punters reasoned that Pennon will need to deliver a terrific performance to sustain momentum.

Tiddler to watch: Firestone Diamonds improved 8.3% to 31/4p, after an update on financing for a treatment plant at its flagship Liqhobong gem mine in Lesotho. An “international bank” has signed up to lead the project finance for the plant, while talks are going well to forward-sell stones from the mine to cut the amount Firestone will need to contribute in equity finance.

Stock market climbs to its highest since 2000 bubble: The stock market rose to its highest level in nearly 13 years as investors continued to ignore an uncertain global economy. The FTSE 100 — which closed another 32.5 points higher at 6,755 — broke through its 2007 peak, when Northern Rock had collapsed but the global financial crisis had yet to begin in earnest.

Vince Cable demands increase in lending to small businesses by bailed-out bank: Royal Bank of Scotland is not trying hard enough to lend to the country’s small and medium-sized companies, the Business Secretary warned. Vince Cable said that RBS and Lloyds each needed to take more responsibility for the economic recovery by helping companies to grow, but added that one was “trying a bit harder than the other”.

Britons get Irish bank home loan reprieve: Bank of Ireland has relented over doubling the mortgage interest rates of 1,300 British customers. The group had planned to increase bills for 13,500 British customers on tracker mortgages, despite the fact that most mortgage consultants believed that tracker mortgages could not be raised unless bank base rate altered.

Goldman is cashing out of Chinese bank: Goldman Sachs is selling the last tranche of its shareholding in Industrial and Commercial Bank of China, amid fears of slowing profit growth in the country. It bought a stake in ICBC in 2006 during an initial public offering, using client and corporate funding to cash in on China’s burgeoning growth.

Sirius remains confident in potash project: Despite mounting disquiet from conservation groups, Sirius Minerals has insisted that it will be able to win permission for its controversial plan to build a potash mine in a national park in North Yorkshire.

Great Portland Estates: Rose 4½p to 598p, after pre-letting part of its New Fetter Lane building to Bird & Bird, the law firm.

Eden Research: Soared 55.7% to 13.625p, after its environmentally friendly pesticides received European approval.

Coms: Advanced a further 3.4% to 21/4p, after the internet telephony company declared that Simon Munro, a well-followed telecoms investor, had taken a 3.2% stake.

Financial Times

Rights issue plan derails FirstGroup: Shares in FirstGroup plunged 30% as investors balked at a £615 million rights issue and the scrapping of its dividend. Some income funds offloaded shares in the public transport group because of the axing of the final dividend, while other investors sold because of the size of the rights issue, likely to halve earnings per share.

ENRC co-founders in line to win with lowball bid, analysts say: The oligarchs bidding to take control of Eurasian Natural Resources Corp, the ailing FTSE 100 miner, are likely to get the company for a lowball price even though its independent board has rejected their first offer, according to analysts.

Mitie exits mechanical and engineering contracting business: Mitie has announced the closure of two lossmaking mechanical and engineering contracting businesses, as it seeks to focus on more lucrative facilities management, healthcare and energy services markets.

Petropavlovsk: Lost 1.2% to 128.2p, after Société Générale downgraded the Russian gold miner from “Buy” to “Sell”.

FirstGroup: Dropped 30.5% to 155.6p, after it set out a deeply discounted rights issue to preserve its credit rating.

Lex:

ENRC: minorities deserve more: The scandal-tainted Kazakh miner has lurched from one self-inflicted mishap to another in the past year; its share price is the thermometer – down 43%. Now, as the U.K. Serious Fraud Office begins an investigation into the London-listed company, its founding oligarchs have come up with a buyout offer. Then again, ENRC may be worth a lot less as a listed company than it might be in private hands. The Founders and the Kazakh government, which own a combined 56% of ENRC, have offered 175p in cash and 0.231 of a share in Kazakhmys, another London-listed Kazakh mining company, for each ENRC share. That amounts to about 260p a share and values ENRC at £3.3 billion. Kazakhmys’s share price, meanwhile, is about 5% below the 370p used by the consortium in making the offer. The offer values ENRC at barely 2.5 times 2013 earnings before interest, tax, depreciation and amortisation. Analysts reckon that ENRC is worth upwards of £6 a share on a sum-of-the-parts basis given the quality of its assets.

Ryanair: options extra: The average ticket price last year on a Ryanair flight was about the same as the cost of 20 cappuccinos. More precisely, it worked out at €48, up 6% year on year – or perhaps a little more on an underlying basis since that includes bag charges, and fliers are finally wising up to the weighty additional costs that luggage entails. Passenger numbers grew 5%, which the low-cost carrier thinks will moderate to 3% in 2013-14. It also forecasts net profits of €570 million-€600 million for the current year. At the top end, that implies a 5% increase from 2012-13’s €570 million. Yet, in contrast to these seemingly modest growth numbers, Ryanair shares have risen 80% over the past 12 months, way above the one-third increase in the Euro Stoxx index. That leaves an obvious question for investors: how much upside remains? In terms of the immediate future, Ryanair has been cautious so often that the market tends to look well beyond management’s own forecasts. After all, a year ago, Ryanair talked of 2012-13 net profits of €400 million-€440 million, and the actual out-turn was 30% higher.

Gold: Chinese and Indian demand: Since China deregulated gold buying in 2002, the country has come from virtually nowhere to become the world’s second largest and, on occasion, largest gold buyer. India has been in the fray for longer. The two countries made up 55% of gold bar and coin purchases in the first quarter, up from 46% a year ago, according to the World Gold Council. Both add important features to gold demand. As BullionVault notes, they are more interested in physical gold buying over the type of investment demand driven by exchange-traded funds in the U.S. and Europe. And contrary to the belief that the Chinese only buy in a bull market, both countries look increasingly like opportunistic buyers. As prices started to fall coming into 2013, gold bullion sales to China surged by more than half in the first quarter from a year earlier and those to India jumped a fifth. The two countries also display seasonal swings in demand. The lack of investment choices and a risky financial system make demand for gold in China particularly attractive.

Lombard:

Running late: Martin Gilbert is finally jumping off the foot plate of FirstGroup, operator of the First Great Western rail franchise. It is clearly a wrench after 27 years during which FirstGroup has developed from a single bus depot in Aberdeen to the world’s biggest listed bus and rail operator, owning Greyhound buses and employing 120,000 staff. But Mr Gilbert should have gone much earlier. FirstGroup’s apologists argue that its difficulties are down to two bouts of bad luck: the first was buying Laidlaw, the U.S. bus operator, in 2007 just as the financial crisis hit; the second came a few months ago when the government ripped up its timetable for awarding rail franchises and derailed FirstGroup’s turnround plans. But Mr Gilbert was in charge when FirstGroup raised the debt to £2 billion and when the board committed itself to an aggressive dividend policy, promising 7% annual rises. The dividend cut and Monday’s £615 million rights issue may have been prompted by a threatened cut to FirstGroup’s credit rating but they have been on the cards for a while.

The Daily Telegraph

Warburtons buys garlic bread maker: The Bolton comedian Peter Kay famously expressed his exasperation at the invention of garlic bread, but that has not stopped Warburtons, the bakery company based in the North West town, from acquiring a leading manufacturer of the specialist bread.

Russia wants Bill Browder on Interpol list: The Russian authorities have escalated their attack on Bill Browder, the British hedge fund Boss spearheading an anti-corruption campaign against the Kremlin, by asking Interpol to place him under surveillance.

Japanese growth could be ‘sugar high’, warns former World Bank President Robert Zoellick: Japan’s 0.9% growth in the first quarter could just be a “sugar high” following the government’s massive stimulus measures, former World Bank President Robert Zoellick has said.

Royal Bank of Scotland: 15.1 better at 351.9p, after Numis upgraded the lender to “Buy” from “Hold”.

The Independent

Bullish mood in City sends market up to 13-year high: London’s leading share index closed at its highest level in almost 13 years, raising hopes that it will break through the 7,000 point barrier for the first time by the end of 2013.

‘Market square’ mall to have local feel: The property giant British Land has revealed that a number of independent retailers will trade alongside the high street’s biggest names at its shopping centre in Fareham, Hampshire.

Food scares and new rules help us, says Cranswick Chief: Food scares and stricter pig production rules across Europe will all be good for the bacon, sausage and cooked meats group Cranswick, its Chairman said.

Think-tank joins the call for a freeze on high street rates: An influential think-tank has become the latest organisation to call on the Government to alleviate the punishing impact of business rates in an effort to curb the spiralling number of store closures on the high street.

Battersea Power Station project gains $1 billion sales: The developers of Battersea Power Station broke through the $1 billion (£660 million) sales barrier amid “phenomenal” interest in new flats and townhouses at the London landmark.

The Guardian

EU bonus cap could double bankers’ salaries, City regulator warns: A European plan to limit bankers’ bonuses could have the perverse effect of leading to a doubling of their salaries, the Chief Executive of the new City regulator, the Financial Conduct Authority, has warned.

Apple accused of ‘highly questionable’ billion-dollar tax avoidance scheme: Apple uses a “highly questionable” web of offshore entities to avoid paying billions in U.S. income taxes, a Senate committee alleged on Monday.

Petrol price rigging inquiry contacts oil traders: Glencore and other big oil trading companies have been asked to provide information to the cross-border investigation into alleged petrol price rigging. There is no suggestion that these companies are being investigated.

Supermarkets summoned to explain confusing pricing policies: The U.K.’s leading supermarkets have been asked to explain their confusing and inconsistent use of “unit prices” on food and drink products in the first step of a new government drive to help cash-strapped consumers work out which are cheapest.

Daily Mail

Glencore is latest London-listed raw material firm linked to oil price fixing probe following BP and Shell’s surprise raids: Glencore became the latest London-listed natural resources firm to be linked to a probe into oil fixing. BP and Shell are already under the microscope.

Broker Views:

Fidessa Group: Barclays initiated the stock with “Overweight” rating and a target price of 2500.00p

Tullow Oil: Sanford C. Bernstein & Co maintained an “Outperform” rating on the stock, with a target price of 1770.00p

E2V Technologies: Investec maintained a “Buy” rating on the stock, with a target price of 210.00p

Kier Group: Liberum Capital Ltd upgraded the stock to “Buy” and increased the target price to 1450.00p

WH Smith: Nomura downgraded the stock to “Neutral” and decreased the target price to 770.00p

Lamprell: Investec downgraded the stock to “Sell” and decreased the target price to 145.00p

Daily Express

FTSE rises to dotcom boom level: The index of Britain’s top quoted companies reached its highest level since the days of the dotcom boom in 2000 closing 32.57 points higher at 6755.63.

Actavis targets Irish drug firm: There was a flurry of takeover activity in the drugs industry as U.S. group Actavis launched a £3.3 billion bid for Ireland’s Warner Chilcott, which is listed in New York.

Yahoo nets Tumblr with a £720 million offer: Internet giant Yahoo is buying blogging firm Tumblr for $1.1 billion (£720 million) in a deal that will net the founder £164 million.

City A.M.

Fallon tells manufacturers to cut costs to compete overseas: Britain needs a leaner and more efficient manufacturing sector if the country wants to increase exports and boost the struggling economy, Business Minister Michael Fallon will argue in a speech.

Vodafone pulls out of bidding for BT mobile: Vodafone has pulled out of the bidding to operate BT’s forthcoming mobile network, leaving O2 as the frontrunner to win the potentially lucrative contract.

Dell committee refuses to open books to Icahn without answers: The committee overseeing a bidding war for embattled PC manufacturer Dell has knocked back activist investor Carl Icahn’s request to review the firm’s books.

Blackstone makes $680 million bid for China’s Pactera Technology: Pactera Technology International said that Blackstone Group, together with the company’s management, made a $680.3 million non-binding proposal to take China’s largest technology outsourcing firm private.

Ofgem under pressure ahead of the committee hearing: Labour lashed out at Ofgem for taking too long to address gas price-fixing allegations, equating the scandal to the one that hit the oil industry last week.

Supergroup appoints Canaccord Genuity: FTSE-250 clothing retailer SuperGroup, the group behind the popular Superdry brand, said it had appointed Canaccord Genuity as joint broker to the group.

StanChart buys Indian wealth business from Morgan Stanley: Standard Chartered revealed it is buying rival bank Morgan Stanley’s wealth management unit in India, expanding the scope of its Asian operations even further.

General Electric set to get a windfall from its finance arm: General Electric is set to get a $6.5 billion dividend from its financial unit GE Capital as part of a plan to reduce the size of the business.

Yahoo to acquire social blogging operator Tumblr in $1bn deal — report

US digital media major Yahoo! Inc (NASDAQ:YHOO) has reached an agreement to buy social blogging website operator Tumblr Inc for USD1.1bn (EUR855.4) in cash as both boards had approved the transaction, informed people told the Wall Street Journal.

The parties could unveil a deal today, one of the sources has said, thus supporting previous reports by AllthingsD. Last week, the news website said that Yahoo! was negotiating the purchase. Its first report followed Yahoo! CFO Ken Goldman’s comment at JP Morgan’s Global Technology conference that the company was looking for ways to become “cool” again and attract younger users.

The agreed transaction would carry a premium as Tumblr was worth USD800m the last time it raised money in late 2011, the WSJ said. The New York-based blogging site’s CEO David Karp told the Los Angeles Times recently that Tumblr had revenues of just USD13m last year.

According to the WSJ sources, Karp will continue to run the business following the acquisition.

Set up in 2007, Tumblr employs some 175 people and features over 108m blogs.

Morning newspaper round up - 20/05/13

The Times

Treasury opposes Osborne’s RBS shares transfer to public: George Osborne is likely to face opposition from Treasury civil servants over plans to transfer the Government’s shares in Royal Bank of Scotland to the public.

Caught in the net: high street closures reach record levels: One in every eight shops in Britain is boarded up, according to shocking new figures that are expected to be seized on by traditional retailers as they demand a tax crackdown on Amazon and other online rivals.

JP Morgan under fire over Jamie Dimon’s boardroom double: Wall Street’s biggest bank has been accused of petulance and defensiveness by some of its own investors before a crucial vote this week on the future of its Chief Executive. JPMorgan Chase shareholders will vote on whether to split Jamie Dimon’s roles as Chief Executive and Chairman in the wake of the London Whale debacle, which cost the bank $6.2 billion.

Walkabout hits the trail once again: After several years in the wilderness, the Walkabout bar chain is set to return to the acquisition trail with the backing of powerful new Private Equity Owners. Intertain, the Owner of the Australian-themed chain, will say that both its equity and its debt have been acquired by Barclays Ventures and a fund jointly owned by TPG and Goldman Sachs in a series of transactions.

High-value cases take toll on fraud-busting numbers at the SFO: Britain’s fraud-fighting agency prosecuted only 20 defendants over the past year, compared with 52 the year before, new figures have revealed. The conviction rate at the Serious Fraud Office also fell to 70%, down from 74% the year before and the third consecutive annual decline.

ENRC and Bumi Chiefs face MPs’ questions: Executives from two of the most controversial companies to list in London in recent years are to be interrogated by MPs this week. The Chairman of the Business, Innovation and Skills Select Committee will call for an inquiry into corporate governance and protection against corruption at mining and oil companies run from Britain.

Marks & Spencer accused of having Amazon-like tax deal: The retail giant Marks & Spencer has come under the spotlight over its tax arrangements after campaigners accused the company of paying less corporation tax on some of its online sales by directing them through Ireland.

Financial Times

Tudor hedge fund hires leading IMF official: Hedge fund billionaire Paul Tudor Jones has hired one of the International Monetary Fund’s most senior officials in a move highlighting the attraction of private sector careers for top public sector figures.

Tesco seeks China partnership: Tesco is eyeing a joint venture in China as it seeks to contain capital expenditure in its sprawling international operations. Britain’s biggest retailer, which has been in China since 2004, is seeking a partnership to help it to continue expanding in the Chinese grocery market, but in a way that uses less capital, according to three people familiar with the situation.

Heron Tower offered £250 million Sternlicht loan: One of the U.S.’s richest property investors has stepped in to provide a loan to refinance the tallest skyscraper in the City of London in a £250 million deal underlining the emerging role of non-bank finance in the U.K. corporate landscape.

Bentley misses out on incentives: Bentley is one company that would profit from a revamp of the way government incentivises spending on research and development. The carmaker, owned by Germany’s Volkswagen, has a 900-strong engineering department that designs the cars it produces at its factory in Crewe.

Lex:

BG Group: production numbers: Was the Bafta that BG Group gave itself last week a bit premature? The oil and gas group gathered analysts and shareholders at the Piccadilly headquarters of British film for a strategy presentation aimed at invigorating a show that had begun to tire in the past few months. Chief Executive Chris Finlayson is winning back some of the lost confidence of investors – BG’s shares are up 20% this year. In its desire to avoid becoming just another member of the Big Oil club, however, it is hard to tell whether BG needs to slow down or speed up. BG will build on what it does best – exploration and its LNG business. Capital expenditure is being reined in – from $12 billion annually this year and next to $8 billion-$10 billion from 2015 – while exploration spending will be lifted to $1.8 billion from $1.6 billion. There was the tantalising prospect of BG becoming free cash flow positive from 2015, and the promise of more returns to shareholders. BG did not give numbers, but analyst estimates suggest that it could generate $2 billion of free cash flow by 2015, rising quickly thereafter on the back of higher production.

Lease accounting: lighter leverage: Two companies may be in same line of business and report similar profits and sales. But the quality of their earnings may be very different. Accounting standard-setters’ job is to ensure that financial numbers are as consistent as possible – or, at least, that disclosure allows fair comparisons. A company that buys equipment or property has to put the asset and associated financial liability on its balance sheet and then take interest and depreciation charges. A similar company that leases the identical equipment/property may face annual rental charges only. On this latter “operating lease” basis, leverage will look much lighter. Largely for that reason, operating leases have become increasingly popular: in 2005, U.S. regulators estimated that public companies there had a huge $1.25 trillion in gross off-balance sheet operating lease commitments. Last week standard-setters had a fresh stab at new rules to tackle this problem. On the plus side, these will require lessees to bring all leases of 12 months or more on to their books. But the proposals also envisage differing treatment, in terms of expense recognition, for property-type leases and equipment-type leases.

Tesla convertible: hybrid financing: Tesla Motors does not do hybrid cars – its Model S sedan is purely battery-powered. But it now does hybrid financing. Of the $1 billion the company raised last week, $600 million came from convertible bonds, which consist of a stream of fixed interest payments along with the option to exchange those payments for common shares. Tesla’s issuance is the serendipitous meeting of a market starved for such convertible paper and the textbook convert issuer. The coupon on the Tesla convertible is 1.5%. Investors accept that paltry rate in return for the option to convert into 8 Tesla shares per $1,000 bond, or at $125 per share. This was a 35% premium to its then price. Tesla, for its part, gets $600 million for a cost of just $9 million a year. And should investors convert their bonds into shares, fantastic – that means that stock jumped another 35%. In 2012, U.S. convertible issuance was only $21 billion, according to Barclays, while high yield issuance was $345 billion. By contrast, in 2007 convertible issuance was about $100 billion where high yield was $50 billion. Fast forward to 2013 where sustained enthusiasm for equities along with historically low convertible issuance have combined to make investors hungry again for hybrids.

The Daily Telegraph

Yahoo! agrees to buy Tumblr for $1.1 billion: The U.S. web giant Yahoo! is to buy Tumblr in a $1.1 billion (£720 million) deal that will net the Founder of the blogging network a $250 million fortune.

NSPCC in £63 million deal to insure pension risks: One of Britain’s best-known children’s charities has struck a £63 million deal to insure the risks on its pension scheme and prevent donations being diverted to retired workers.

Vodafone tied to Verizon’s prosperity: Vodafone will reveal the growing extent of its reliance on Verizon Wireless to bring in profits as it struggles with Europe’s continuing economic problems and faces pressure to sell its stake in the American mobile operator.

Australian mining tycoon poised to become world’s wealthiest woman: Even before last week, Gina Rinehart was worth about $17 billion (£11.2 billion), according to the Forbes rich list, making the mining magnate Australia’s wealthiest person by a comfortable stretch.

The Independent

Britain faces years of high inflation: Britons should be braced for years of high inflation as the cost of living soars stubbornly ahead of wages, a leading economic forecaster warned. The Ernst & Young Item Club said persistently high inflation had knocked almost 3 percentage points off the economy over the past three years and was set to remain above the Bank of England’s 2% target “for the foreseeable future”.

Luxury giant reveals growing interest in Joules, retailer to the county set: L Capital, the private-equity arm of the world’s biggest luxury goods company, LVMH, is among suitors plotting to make a major investment in Joules, the fashion retailer favoured by the county set.

Whitworths snacks Owner mulls sale: A 127-year-old British maker of snacks and baking products has hired advisers to explore strategic options that could see it sold for more than £100 million.

Confidence returns to factories: Expectations of growth in the manufacturing sector in England are at a 12-month high, according to the Manufacturing Advisory Service. Its quarterly barometer found 93% of manufacturers surveyed plan to hire or retain their workforce, and nearly two thirds are expecting to increase sales over the next six months.

The Guardian

Google Chairman Eric Schmidt softens line on tax loopholes: Google’s Chairman, Eric Schmidt, has said he welcomes promises by international leaders to crack down on tax loopholes exploited by the search firm and other multinational internet businesses that take billions of pounds of sales from the U.K. through overseas companies, which HM Revenue & Customs cannot tax.

Average London house price rockets past £500,000: New figures showing that the average asking price for a home in London has risen to more than £500,000 for the first time could add to fears of a new house price bubble being fuelled by cheap mortgages and government schemes to boost the market.

Debenhams backs fair treatment of models: Debenhams has become the first high street retailer to sign up to a new code of conduct for working conditions for models, with the Chief Executive, Michael Sharp, calling on others to follow suit.

Scottish bank customers warned over deposit protection scheme: The analysis, part of the Treasury’s look at devolution’s impact, says an independent Scotland could have significant difficulties providing standalone protection to match the current Financial Services Compensation Scheme (FSCS), which protect deposits in U.K. banks up to £85,000.

Daily Mail

Royal Mail expected to announce profits of ‘up to £400 million’ as it cashes in on online shopping boom: Royal Mail is expected to unveil a huge jump in annual profits this week as it clears the way for a £3 billion stock market flotation later this year. Profits could almost double at the state-owned business as it should report a surplus of between £300 million and £400 million, up from the £211 million it made in operating profits last year.

Sir Roger Carr leads the race to become chair at BAE Systems: Carr, who is the Outgoing President of employers’ group the CBI and was Chairman of Cadbury during its £10 billion takeover by Kraft, would replace Dick Olver, who has held the role for nine years.

Co-op Boss rejects capitalist model in wanting to find an alternative: Speaking to members at the annual meeting this weekend, Euan Sutherland said: ‘Traditional capitalist models are not providing the answer to the concerns of people. People are looking to us to find the alternative.’

Daily Express

Burberry expected to bag £2 billion sales: Burberry is expected to rack up sales of £2 billion when the upmarket fashion retailer unveils its annual results this week. The group, famous for coats, bags and other accessories in its trademark check, said last month that revenue in the six months to 31 March had risen 9% to £1.116 billion, on top of first-half revenue of £883 million.

Landing a deal on legroom: A couple found no room to manoeuvre after booking seats with added legroom on return flights from Manchester to Cyprus. Shortly after paying an extra £79.96, airline Jet2.com told John and Anne Molloy the aircraft had been changed and no extra space was available.

Tyrell’s ‘to be sold’: Buyers are set to tuck into upmarket crisp maker Tyrrell’s, being sold by Langholm Capital.Kellogg’s, Japanese snack firm Calbee and Butterkist popcorn maker Tangerine are all thought to be interested.

City A.M.

YO! Sushi Owner gets taste for Byron burgers: The Owner of high street restaurant YO! Sushi has emerged as a potential suitor to snap up hamburger chain Byron after submitting a bid for the company, it is thought.

Bernard Matthews firm is keen to tap external investment cash: Norfolk-based turkey farming firm Bernard Matthews is poised to open up ownership of the family-controlled business under fresh plans to boost the company.

Tesco fashions set for Middle East expansion: Tesco is looking to growth in Middle Eastern markets as it plans to open more than 50 new franchise stores worldwide over the next five years for its clothing brand F&F, Britain’s biggest retailer announced.

sunday newspaper roundup - 19/05/13

The Sunday Times

Royal Mail profits tee up £3 billion sale: Royal Mail is set to unveil bumper annual profits this week paving the way for a blockbuster £3 billion privatisation

Brussels oil probe homes in on Brent Crude price: Investigators from the European Commission are examining whether oil companies and traders profited by rigging the price of the world-famous Brent Crude index

Carr in pole position to become BAE Chairman: Britain’s biggest defence contractor, BAE Systems, is in advanced talks to make Sir Roger Carr its new Chairman

Arms sell-off risks Pentagon backlash: Britain risks angering the Pentagon by pressing ahead with plans to privatise the agency responsible for buying jets, warships and tanks

Steel giants rocked by huge losses: Two of Britain’s biggest steel makers have been hit by further thumping losses as the industry struggles to cope with a slump in demand and cheap foreign competition

Banks demand price cut from snooping Bloomberg: Wall Street’s biggest banks are pushing Bloomberg to cut the annual $20,000 charge on its data terminals in response to revelations that its reporters have been snooping on traders

Tesco hits Silk Road: Tesco has signed deals to open a swathe of new stores for its clothing brand F&F in central Asia and the Middle East

Myners hits takeover trail with homeless billionaire: Lord Myners has resurrected his partnership with an investor known as the “homeless billionaire” to raise a £600 million acquisition fund

Capitalism broken, warns Co-op Boss: The new Boss of the Co-operative Group claimed yesterday that capitalist business models are broken, as concerns continued to mount about the mutual’s banking business

Alarm at hostile raider: A tiny technology company that produces smoke alarms that are sold by Britain’s fire brigades is attempting to fend off a hostile takeover bid from a giant American rival

Bonus curbs for stock pickers: City fund managers will be forced to pay half their annual bonus into the funds they manage, under new rules threatened by Brussels

Bid battle for posh boxes: Two of the world’s biggest buyout firms are vying to wrap up a £400 million deal to buy an Anglo-American packaging specialist. Blackstone and Carlyle are regarded as front-runners to acquire Chesapeake, which produces packs for medicines and food and drink, such as upmarket scotch whisky

Food giants to bag crisp maker: A Crisp Maker started by a Herefordshire farmer is about to become the focus of a global takeover tussle. A colourful cast of food companies from around the world is hoping to gobble up Tyrrells, the upmarket crisp maker, which turned William Chase, a potato farmer, into a multimillionaire in 2008

Turkey talks for LSE: The London Stock Exchange is considering buying a stake in Istanbul’s fast-growing stock market as part of a deal that could see Turkish trades settled in the City

Matthews clan in talks to sell stake: The Bernard Matthews turkey empire is in talks to secure a cash lifeline that could see the founding family give up a sizeable stake in the business

Financial Times

New money put City’s reputation at risk: In early 2007, at the height of the debt boom, a group of powerful investors issued a stark private warning to the City’s regulator: the reputation of London’s prestigious stock market was under threat

Ambrosiadou wins battle over Ikos codes: Elena Ambrosiadou, one of Europe’s wealthiest women, has won a crucial legal battle against her estranged husband over control of the secret trading codes used by their multibillion-dollar hedge fund, Ikos Asset Management

ENRC consortium given buyout extension: The founding shareholders of Eurasian Natural Resources Corporation have been granted a two-week extension to make an offer for the FTSE 100 company following an initial proposal that was spurned

The Sunday Telegraph

Help to Buy puts mortgage market at risk, says King: The Governor of the Bank of England has said there is no place for the Government’s flagship scheme to help people on to the first rung of the housing ladder in the “long run”

Tesco to battle ‘breathtaking’ level of food waste: The food waste initiative is part of the Tesco and Society campaign, to be launched with a major report this week

Shell: Oil market regulation will cost consumers

Vodafone’s decision time over U.S. partner Verizon: Ahead of its full year results, the telecoms group is under pressure to decide the fate of its stake in the Verizon joint venture

The Questor Column:

Lloyds sale draws closer as incredible run keeps going: Lloyds shares have enjoyed a phenomenal run over the past 12 months. It seems difficult to believe that just last May the stock was trading below 25p – last week it traded above 60p for the first time since March 2011. With shares in the bank on Friday trading through the Treasury’s minimum “break-even” price for a sale of 61.2p, it is quite possible to see a large slug of the shares potentially on the block before the end of the year and possibly within the next couple of months. The prospect of the Government drenching the market with Lloyds shares means there is likely to be a very real overhang on the share price, meaning that a further dramatic rise in the stock seems unlikely. As profitability continues to recover, it seems reasonable to hold on to the shares. Questor says Hold.

Betfair shows resilience as takeover talks collapse: Betfair’s punters are used to high-stakes games. But until last month, few in the City would have expected that they would be placing bets on the gambling exchange itself. The stock was in danger of being forgotten by gaming analysts until on April 15, CVC Capital Partners, admitted it was in talks with two Betfair shareholders over a takeover bid for the gambling group, which has been a public company since 2010, when it floated at £13 a share. Three approaches were made, at 880p a share, 920p a share and 950p, before offer talks ended late on Monday night. Before CVC first showed its hand on April 15, Betfair’s shares were trading at 699.5p, meaning the stock has gained more than 20% in value during the takeover tussle. As part of the company’s defence, Mr Corcoran upgraded forecasts, saying he expects full year revenue to reach about £387 million, up from previous guidance of £370 million to £385 million, while underlying earnings before interest, taxes and amortisation is likely to be in the region of £73 million. Analysts appear to have faith in the new strategy and believe there is more progress to come, which will justify the Betfair board’s rejection of CVC’s final offer. The shares are trading on a 2014 price-earnings ratio of 16 times. While Questor believes Betfair has come a long way over the past six months, we retain our caution and our hold stance. Questor says Hold.

The Independent on Sunday

Energy firm SSE to feel the heat as soaring profits leave customers cold

M&S staff bonus at risk: Marks & Spencer’s store staff could see their meagre £100 bonus trimmed or ditched after the retail bellwether posts a further fall in annual profits this week

Falling fuel and beer prices herald rare inflation drop: Easing pain for motorists at the petrol pump and Chancellor George Osborne’s Budget beer duty largesse should this week herald the first fall in inflation since last September

Bidding war for burger chain Byron: The owner of Yo Sushi is battling rival private equity firms to acquire Byron, the upmarket burger chain, for £100 million

‘£6 billion’ cost of extra day off: The extra bank holiday for the Queen’s Diamond Jubilee could have cost the economy up to £6 billion in lost output, the Office for National Statistics said yesterday

U.K. sales boom lifts European gloom: Europe’s struggling car industry ended a dire 18-month run of declining sales in April thanks to booming sales in the U.K.

Punters rushing to back Jockey Club’s debut: Horseracing punters have bet big on the Jockey Club’s first venture into the retail bond market.

JP Morgan Chief given a boost before vital vote on job-split: JP Morgan Chase shareholders are being asked to vote against a proposal that calls for a splitting of Jamie Dimon’s dual role as the giant American bank’s Chairman and Chief Executive

Lloyds’ shares rise above break-even level, raising hopes for sell-off of taxpayers’ stake

The Guardian

U.K. exporters whistle up success in a thriving new market: America

Eurozone crisis as it happened: Greece on track to exit slump next year, says Troika

Ocado tie-up to help Morrisons start selling groceries online: A major spat is brewing among the grocers after Ocado signed a 25 year deal with Morrisonssupermarket, enraging its long-term partner Waitrose

The Mail on Sunday

Broker Views:

Aviva: RBC Capital Markets downgraded the stock to “Underperform” rating at a target price of 300.00p

Petropavlovsk: Canaccord Genuity Corp maintained its “Buy” rating on the stock, with a target price of 510.00p

Centamin: Numis Securities Ltd maintained its “Buy” rating on the stock, with a target price of 80.00p

Optos: Jefferies maintained its “Buy” rating on the stock, with a target price of 240.00p

Daily Express

Mothercare set to deliver bouncing full year results

Care home rival hopes to seal Castlebeck deal: Care homes company Castlebeck, which fell into administration in March, is poised to be taken over, with rival care operator Danshell understood to be the frontrunner

Co-op hopes £10 billion sale boosts its buffers: Co-operative Bank, reeling from a credit rating downgrade earlier this month, is to put a total of £10 billion of troubled loans up for sale or into run off as part of plans to improve its capital position

Profits soar as ‘chicken king’ reigns supreme: The business empire of self-styled “chicken king” Ranjit Boparan, ­supplier of meats to Asda, Marks & Spencer,Morrisons and Tesco, has returned to profit, according to ­accounts filed at Companies House

Pressure on for bosses at JP Morgan and HSBC: The heads of banking giants HSBC and JP Morgan will come under pressure from investors this week, when both hold their annual meetings.

IMF puts spotlight on U.K.’s ‘recovery’: The IMF is set to deliver its eagerly-awaited verdict on the state of the U.K. economy as early as this week, potentially putting it on a collision course with the Chancellor George Osborne

Morning newspaper round up - 17/05/13

The Times

Gilts: U.K. Government bonds rallied after the latest economic data from America heightened concerns about the health of the U.S. economy. The June gilt future settled 54 ticks higher at 118.7, underperforming bunds a day after the Bank of England was upbeat about the U.K. economy. In the cash market, the yield on ten-year gilts fell six basis points at 1.86%.

Bet of the day: Spread-betters were selling gold as its price fell for a sixth day. A stronger dollar and less voracious demand for commodities generally have combined with share prices running to their best in years to diminish the attraction of bullion for investors, prompting funds to cut positions.

Deal of the day: Though Black Mountain Resources marked time at 9p, the AIM miner hit high-grade silver at its New Departure project in Montana in the U.S. Production is due to start there before July, providing the company with its first revenue. Westhouse kicked off coverage recently by urging clients to buy shares on which it set a target price of 23p.

Lottery has raised more than £30 billion in 18 years: When the National Lottery was launched by Camelot in 1994, it was predicted to raise about £1 billion a year for good causes. It was revealed that the amount raised over the past 18 years had passed £30 billion.

Trinity Mirror buoyed by ad prospects: Shares in Trinity Mirror surged 12% as a fall in advertising revenue eased off in the first four months of the year. The publisher of the Daily Mirror said that revenue had shrunk 13% in January and February but recovered to 7% lower in the subsequent two months.

Property fraudster Achilleas Kallakis given extra four years: A flamboyant Greek property fraudster who conned two banks into lending him more than £750 million will be locked up for an additional four years after a court ruled that his original sentence was not harsh enough.

North Yorks potash mine ‘will drive the tourists away’: Plans for the world’s biggest potash mine in the heart of the North Yorkshire Moors could blight tourism in the area for years to come, a study has concluded. The planning process for the £1.1 billion project, situated on a wooded site at Sneaton on the edge of the national park four miles from Whitby, is heading for its denouement this summer.

Fury on Sandbanks as ‘garish’ Tesco prepares to set up shop: It is one of the most exclusive property enclaves in Britain but residents of the Sandbanks peninsula in Poole have been unable to keep out one unwelcome interloper: Tesco. The former sandbank, which sticks out like a bejewelled finger into Poole Harbour, is one of the most expensive places in the world to live.

Dell plunges to earth despite head in clouds: Dell’s profits fell 79% in the first quarter as the computer manufacturer’s attempts to stem a collapse in the PC market were less effective than hoped.

TUI Travel: Ran on 13½p to 3683/4p, after analysts pushed out upgrades following Wednesday’s results.

Petrofac: Lost 37p to £13.25, after the oil services group said that its In Salah gas plant in Algeria would not be running at full speed again until the second half of the year.

Financial Times

SFO explores powers to investigate alleged oil price-fixing: The Serious Fraud Office is undertaking an “urgent review” to see if it has the authority to investigate allegations of price-fixing in the oil market. The anti-fraud body said it was consulting with other agencies – thought to be the police and the Office of Fair Trading – after his week’s European Commission raids on BP, Royal Dutch Shell and Statoil.

Bolland bonus at risk as M&S set to miss targets: A poor performance at Marks and Spencer is set to take its toll on Chief Executive Marc Bolland’s bonus for the third year running, as the high street bellwether prepares to announce a fall in pretax profit. Mr Bolland, who was paid a salary of £975,000 last year, could earn up to almost £2 million in annual bonus.

Chief says Stobart has moved on from board coups: The Chief Executive of Stobart Group has expressed confidence that the Cumbria-base haulier had moved on from its boardroom coup and counter-coup, as solid half year results lifted its shares.

ENRC: Lost 1.1% to 295.3p, after Russian businessman Suleiman Kerimov cut his stake to 3.14% with the sale of 422,824 shares.

AB Foods: Lost 5.2% to £19.25, on a profit warning from German peer Suedzucker, Europe’s biggest sugar producer.

Thomas Cook: Rallied 13.4% to 164.1p, after unveiling extra cost savings with its long-awaited refinancing, which included a £425 million equity issue.

Lex:

Glencore Xstrata: City grandee needed: City grandees are a bit like red telephone boxes. They might be going out of fashion, but they can be incredibly useful. Sir John Bond is a case in point. His departure as Chairman of Glencore Xstrata shows how fickle investors can be. Ivan Glasenberg, Chief Executive of Glencore Xstrata, is the sort of hard-charging boss who needs someone to challenge him. That requires a forceful personality, vast experience, the confidence of the City of London and a gift for communication. Tony Hayward, who took over temporarily as Chairman at Thursday’s Glencore Xstrata board meeting, is said not to be seeking the role. The board of Glencore Xstrata should appoint a Chairman who is equal to Mr Glasenberg in the knowledge stakes – not about mining, necessarily, but about life in general – and the opposite of him in manner. One of the attractions of the merged company, it is being touted, is the almost perfect alignment of the interests of shareholders and management. The first task for Glencore Xstrata’s new Chairman will be to ask whether they really are one and the same.

Google: Shares break $900: Google shares have broken $900. The interesting question now is not whether they can breach $1,000 but rather what keeps them from the fate of Apple’s shares, which have crashed 40% since they broke the symbolic $700 last autumn. Google’s latest announcement came at its annual developer conference, held on Wednesday. It revealed the much-anticipated Google All-Access Music Play, its wordy answer to Spotify’s streaming music service. A voice recognition tool for its search engine and a browser that synchronises across desktop and mobile devices were also introduced. The company says there are 900 million mobile devices running Google’s Android operating system and 700 million using the Chrome web browser up from 300 million, so Google is building a big audience. When Apple introduces a product, that product better sell. Regrettably, discussion of the company has shifted from selling cool new phones to foreign taxes.

3i: product misplacement: In January Edward Bramson, known for shaking up the companies in which he invests, started building a stake in 3i. He now owns 5% but he has been silent about his intentions. He has passively watched the share price rise 53% since he first bought shares in the private equity group. The share price, languishing at a 36% discount to net asset value when he started, is now at a 10% premium. Justifying that premium will depend on two things. First, whether Mr Borrows can turn the private equity part of the business round. It accounts for almost 40% of total assets under management but most of it is 3i’s own money rather than client money, so it has a big impact on the bottom line. Recent disposals have been good – realised profits were £190 million last year, against £22 million the year before.

Lombard:

Trucking incredible: The annual results of Stobart Group, a mini-conglomerate best known for trucking, are not as yet supplied as a supplement to Puzzler magazine. But it can only be a matter of time. First, consider the income statement. Unusually, a £13.5 million loss on a discontinued business is deducted after tax. Strip it out higher up, and the solid gold of a 24% rise in pretax profits is transmuted into the base metal of a 22% decline. Second, dig into the notes. These reveal that Stobart Group will pay an extra £1.4 million to Chief Executive Andrew Tinkler and Chief Operating Officer William Stobart for a property portfolio the company bought from them for £12.3 million last year. Third, take a gander at Mr Tinkler’s introductory remarks. These record an increase in Stobart’s stake in niche airline Aer Arann to 45%. According to Stobart, the shares were sold by Invesco, which owns a 36% stake in Stobart itself.

Back from the dead: Travel agent Thomas Cook can credibly answer “Yes”. A £1.6 billion financing package should set the travel agent firmly on course for recovery. A turnround led by Chief Executive Harriet Green has made the difference between crashing into the Med and landing safely at Malaga airport. Slumping shares slashed Thomas Cook’s market capitalisation to just over £100 million, against net debts of about £1 billion. Following the refinancing, £425 million of it from share sales, net debts should fall to about £400 million at the September year-end, when travel agents are generally flush with cash. A debt geek could swoon over Thomas Cook’s extended maturities. They reflect the success of Ms Green, former Boss of components group Premier Farnell, in winning investors’ trust.

The Daily Telegraph

Sale of taxpayers’ Lloyds stake moves closer as shares nudge ‘break-even: A sale of some of the taxpayer’s stake in Lloyds Banking Group has come a step closer after the state-backed lender’s share price came close to reaching the government’s minimum “break-even” price.

BP attacks Gulf trial judge as it fights against ‘raid on its coffers’ for ‘absurd’ compensation claims: BP has launched a blistering attack on the judge presiding over its fate in the Gulf of Mexico trial, as it escalates its fight against the “raid on its coffers” for “fictitious” compensation claims.

Invensys to hand £625 million to shareholders: Engineering business Invensys is to return £625 million to shareholders after selling its railway business to Germany’s Siemens for £1.7 billion.

Asda sales rise 1.3%: Asda, Britain’s second-largest supermarket group says like-for-like sales growth accelerated to 1.3% in the first quarter of 2013.

Gatwick urges better pricing to compete with Heathrow: London’s aviation capacity problems can be eased in the short-term by “flexible” pricing that will allow smaller airports to better compete with Heathrow, it has been claimed.

Facebook and Twitter launch Google Glass apps: Facebook and Twitter have launched applications for Google Glass as developers rushed to learn more about tailoring software for the internet-linked eyewear yet to hit the market.

Aviva: Jumped 23.4, or 7.2%, to 346½p, after the insurer reported an 18% rise in the value of new business to £191 million in the first quarter, boosted by growth at its Asian operation, where new business rose 29%.

William Hill: Rose 11.1 to 447p, on news it would be included in the index at the end of the month, a development that spurs demand from tracker fund for its shares.

The Independent

CPP bosses walk out to cut the costs: The Chief Executive and Finance Director of troubled credit card insurer CPP decided cost-cutting across the company would have to include their own jobs. Hundreds of CPP’s 1200-strong U.K. workforce are likely to lose their jobs.

RBS to cut 1,400 head office jobs as it plans private sector return: Royal Bank of Scotland is to cut a further 1,400 jobs over the next two years. Most of the job losses are expected to be at RBS’s offices in Edinburgh as the 81% taxpayer-owned bank said that it would not be cutting frontline staff in branches.

Cairn India profits lift Vedanta results: Underlying profits at Vedanta rose 21% last year to $4.89 billion (£3.19 billion) as revenues from oil and gas assets acquired in late 2011 helped offset iron-ore mining bans that cost the Indian-focused miner almost $500 million in lost profits.

National Grid’s energy pricing boost: National Grid has said it is set to make a “strong start” under the new pricing regime which it attacked a year ago as “lacking the essential investments to provide safe, reliable networks”.

Walmart suffers surprise drop in sales: The grim consumer environment in the United States led to an unexpected drop in sales in Walmart over the first quarter, with the world’s largest retailer missing Wall Street expectations.

The Guardian

International Monetary Fund warns on quantitative easing costs: The Bank of England’s recession-busting policy of quantitative easing could end up costing the Treasury up to £80 billion – more than outweighing any profits it will make from the scheme, according to new research by the International Monetary Fund.

Pru avoids pay revolt but 11% vote against remuneration report: Prudential bosses escaped a full-scale pay revolt at the insurer’s annual meeting on Thursday but shareholders accused them of greed just weeks after the company was fined £30 million by the City regulator.

Up to 3.5 million people owed tax refund, says HMRC: Up to 3.5 million people unwittingly paid too much tax in 2012-13 and are owed refunds averaging between £350 and £500, HM Revenue & Customs has revealed.

Daily Mail

Pay revolts hit Balfour Beatty, Prudential and Lloyds Banking Group: Pay revolts rocked Balfour Beatty, Prudential and Lloyds Banking Group in the latest wave of shareholder unrest. Building and infrastructure giant Balfour saw 32% of investors refuse to back its pay arrangements in the biggest revolt of the day.

Shares in Aviva surge as struggling insurance giant delivers solid start to year: The firm said the value of new business – a key measure of growth – rose by 18% in the first three months of the year to £191 million.

Private equity firm 3i, which controls lingerie firm Agent Provocateur, strips off costs: Private equity firm 3i, which controls lingerie firm Agent Provocateur, said it has exceeded cost-savings for the year as Boss Simon Borrows attempts to turn the business around.

Mitchells & Butlers: Rose 21.9p to a 52-week high of 399.1p, amid vague speculation that billionaire Joe Lewis is looking to increase his stake to 29.9% from 26.3%.

Ricardo: Rose 8p to 416p, on a pleasing trading statement covering the first eight months of its full year ending June 2013.

Synthomer: Lost 17p to 208p, after warning that profits will be lower than the previous year due to weak demand in Europe, particularly in the construction industry.

Broker Views:

Petropavlovsk: Canaccord Genuity Corp maintained a “Buy” rating on the stock, with a target price of 510.00p

Centamin: Numis Securities Ltd maintained a “Buy” rating on the stock, with a target price of 80.00p

Optos: Jefferies maintained a “Buy” rating on the stock, with a target price of 240.00p

Daily Express

Virgin Atlantic dives: The airline made a loss of £93 million in the year to the end of February, against a loss of £80 million in the previous year. After a one-off gain, group losses were £69.9 million.

TakTalk takes bite of online TV market: TalkTalk is taking 12,000 customer orders a week for its new YouView TV service, lifting total TV subscribers to 230,000.

Competitor’s collapse helps Dixons’ sales: Sales at the Owner of Currys and PC World soared 13% in the three months to the end of April after retailers Comet and Jessops folded. Chief Executive Sebastian James said the company had secured “more than its fair share” of business from Comet, which collapsed in November.

City A.M.

Gates is world’s richest man with $72.7 billion: Microsoft Co-Founder Bill Gates regained his crown at the world’s richest person, the first time he has held the title since 2007.

S&P cuts Berkshire Hathaway rating: Credit-rating agency Standard & Poor’s cut its rating on Berkshire Hathaway, the insurance and industrial conglomerate controlled by billionaire investor Warren Buffett, one notch, citing the company’s reliance on its insurance operations for dividend income.

Petrofac eyes modest growth: U.K. oil services firm Petrofac said it expected modest growth in net profit this year after its books were hit by the shutdown of the In Salah gas plant in Algeria following an attack in January on the neighbouring In Amenas plant.

Premier Oil hails strong quarter: FTSE-250 listed Premier Oil hailed a strong start to the year, saying production for the first six months would be between 58-60,000 barrels of oil equivalent per day (boepd), putting it on track to meet expectations for the full year.

Afren sees production rise 14%: Afren credited a 14% rise in net production in the first three months of the year compared to the same period a year ago to its Ebok and Okoro fields offshore Nigeria.