Monday newspaper round-up: Pre-Budget, Shanks, Mitchells & Butlers
Mon 07 Dec 2009LONDON (SHARECAST) - Alistair Darling, chancellor, is preparing a crackdown on “extraordinarily high” bankers’ bonuses when he makes his pre-Budget report on Wednesday, but is expected to reject a windfall tax on bank profits.
Mr Darling’s officials are in a race against time to draw up some form of supertax to curb what the chancellor fears will be a lavish bonus season, only months before a general election, the FT reports.
But the Chancellor will drive out the very people needed to create growth in Britain if he imposes hefty tax rises on the rich in the pre-Budget report (PBR), the business community has warned. Business groups including the British Chambers of Commerce (BCC) sounded the warning amid mounting expectations that Alistair Darling is contemplating a new 60% to 70% tax rate for those earning more than £500,000, as well as a windfall tax on banking bonuses, the Telegraph reports.
Shanks Group has received a £535m ($882m) unsolicited takeover approach from the Carlyle Group, the US private equity house, which is being supported by the waste management company’s biggest shareholder. The board of the FTSE 250 company, which raised £66.7m in a rights issue in May, discussed the approach at the weekend and was set to make a statement to shareholders on Monday. Carlyle made an approach worth 135p per share, which people close to the situation said was “highly preliminary,” the FT reports.
Joe Lewis, the flamboyant billionaire investor, is threatening to take legal action against Mitchells & Butlers (M&B) in an attempt to force the pub and restaurant operator to reinstate the two representatives of his Piedmont investment vehicle who were ousted last week from the company’s board. Piedmont, which has a 23% stake in M&B, will launch its fight back today against accusations by the All Bar One operator that it has been secretly trying to gain control of the company, the Times reports.
Supermarket giant Tesco is opening a network of 'dark stores' which will never be visited by shoppers. The supermarkets, which are laid out in the same manner as normal stores, will be used exclusively by staff doing virtual shopping for online customers. Instead of the public browsing up and down the aisles, teams of Tesco workers will push their own trolleys around as they complete more than 1,000 shopping lists every day, the Telegraph reports.
As the Chancellor adds the final polish to his pre-Budget report on Wednesday, some of Britain's leading business organisations have warned that the recovery will be fragile and that soaring public borrowing threatens the UK's international credit rating. Britain runs a high risk of a "relapse" into recession next year. The Engineering Employers' Federation says that conditions in the British manufacturing sector have continued to improve, but that signs for a strong rebound in 2010 "remain elusive," the Independent reports.
Citigroup is racing against the clock to convince US authorities that it be allowed to repay $20bn of bail-out funds, with insiders and regulators arguing that unless the bank acts in the next 10 days it will have to wait for more than a month. The short window for a decision on the repayment of funds from the troubled asset relief programme raises the stakes for Citi in its quest to free itself from the shackles of the government, which also owns a 34 per cent stake in the lender.
Meanwhile, Kuwait's sovereign wealth fund has sold its stake in Citigroup for $4.1bn (£2.4bn) just two years after it invested in the US's largest bank. The Kuwait Investment Authority (KIA), which manages state assets for the world's fourth-biggest oil exporter, is estimated to have made a $1.1bn profit on its investment – a 37% return, the Telegraph reports.
Three out of four private sector employers expect to be forced to make even bigger contributions into their final-salary pension schemes, even though most of their schemes have been closed to new members for years. According to the CBI, 73 per cent of respondents to its biennial pensions survey expect to have to pay even more after their next funding plan, the Times reports.
National Express is close to appointing Dean Finch, the boss of London Underground maintenance company Tube Lines, as its chief executive, ending months of uncertainty at the troubled bus and rail operator. An announcement of the appointment of Mr Finch, a former chief operating officer of rival bus and rail operator FirstGroup, could come within days, the FT reports.
The future of Gala Coral, the highly leveraged gambling operator, will be decided this week as the group’s mezzanine finance providers seek to persuade its bankers to reject a bid for control by Blackstone and Permira and instead support a debt-for-equity swap. The mezzanine consortium, led by Intermediate Capital Group and Park Square, will urge the senior lenders tomorrow to back its plans to convert £540m of mezzanine debt into equity in a financial restructuring that would reduce Gala’s net debt burden from £2.5bn to below £2bn, the Times reports.
Independent News and Media, the newspaper group, is to offload Verivox, the German price comparison website. The group is expected to announce today a €17m (£15m) deal to sell its 49 per cent stake to Oakley Capital, a private equity group. The deal will provide a welcome profit for the publisher of The Independent and The Independent on Sunday. It bought its stake in 2006 for virtually nothing, the Times reports.
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