(TSCO.L) Tesco PLC Buy/Sell

Daily Telegraph

BLACKSTONE MOVES TO TAKE OVER GALA CORAL

Blackstone has been allowed to conduct due diligence at Gala Coral after making an audacious late intervention in the bingo group's 2.5 billion debt restructuring. Blackstone could make a 250 to 300 million pound cash injection in Gala, which was valued at five billion at its peak, in return for a majority stake. Gala's private equity owners -- Cinven, Candover and Permira -- have already agreed a deal with junior lenders designed to keep the business' bingo and gaming divisions together. However, this would be usurped should Blackstone's offer be accepted.

TESCO MOVES CLOSER TO FULL BANKING WITH IT SYSTEM

Fiserv has been appointed by Tesco to provide the software to enable it to become a full-service bank. Fiserv's involvement, as one of the world leaders in providing retail banking software, will turn the supermarket from a provider of a collection of financial products into an integrated, full-service bank which is expected to make great inroads now that competitors are struggling. David McCreadie, commercial director of Tesco Bank, called for patience in a meeting with investors, saying it would take time to develop the correct proposition on current accounts and that expanding into mortgage lending would require a broader source of funding.

MERGE WITH HERSHEY, ANALYST TELLS CADBURY

Richard Royden, head of GFI's European Special Solutions group, has called on Cadbury to merge with Hershey with a dual-listing of the company's shares on the London and New York markets. Royden told Cadbury chief executive Todd Stitzer in a letter that the move would be its best defence against Kraft's unwanted 10 billion pound bid. Fifty-five percent of the company would be listed in London and 45 percent in New York under Royden's analysis, minimising debt issuance and avoiding "equity dilution for existing Hershey shareholders".

The Times

UKFI'S FORMER HEAD IS SET TO JOIN ROTHSCHILD

NM Rothschild is expected to announce the recruitment of John Kingman, former chief executive of UKFI, as managing director on Monday. Kingman will advise "a number of corporate clients" when he begins his new role in March. UKFI was set up a year ago to manage the government's stakes in Royal Bank of Scotland, Lloyds Banking Group and Bradford & Bingley's mortgage book. The institution has had to walk a difficult path in convincing investors it was acting on commercial grounds while also adhering to the political will of the Treasury.

RIO'S CLOUD PEAK COAL FLOAT FAILS TO SET INVESTORS ALIGHT

Shares in Rio Tinto's Cloud Peak coal operations fell from 15 dollars to 14.45 dollars on their first day of trading on the New York Stock Exchange. The listing is part of a strategy Rio has for divesting non-core assets and reducing its debt burden, with the flotation raising 434 million dollars for the mining group. Francis Gaskins of research website IPOdesktop.com said: "There's investor push-back because (the money raised) is not going back to the company and it's not for growth. It's just a Rio Tinto bailout."

LACK OF M&A BUSINESS CUTS REVENUE AT LINKLATERS

Linklaters saw revenue fall by almost 10 percent in the half-year ending October 31 despite winning big legal work in dealing with the economic downturn. A lack of mergers and acquisition activity was blamed for revenues falling from 653 million to 591 million pounds year-on-year. Linklaters earned almost 70 million pounds for its work on the European division of Lehman Brothers' administration and is continuing to work with Royal Bank of Scotland. Simon Davies, managing partner of Linklaters, said M&A activity had recovered in recent weeks, particularly in emerging markets such as India, Brazil and China.

The Independent

BARCAP TAKES OVER CRESCENT FROM MORGAN

Morgan Stanley has handed over its Crescent property business to Barclays Capital, drawing a line under the 6.5 billion dollar deal that was struck in 2007 but quickly soured. Morgan Stanley is to transfer ownership of the business to BarCap in exchange for Barclays taking responsibility for all liabilities of loans relating to Crescent. Morgan's plans to put Crescent's assets into real estate flopped when the market froze. Barclays acquired Crescent in a joint venture with its co-founder John Goff.

GARTMORE SETS HARE RUNNING ON FLOTATION BOOM WITH BILLION

POUND LISTING

Gartmore intends to list its shares on the London Stock Exchange next month, valuing the business at at least one billion pounds. The flotation is intended to raise 250 million pounds for the company, enabling it to reduce its 400 million pound debt to 150 million. Forty-three percent of Gartmore is owned by its management, who will be allowed to cash in up to 20 percent of their stock. Jeff Meyer, the chief executive, said: "The market has been recovering. There are a lot of companies likely to come to market next year. We thought we would open the gateway."

FULLER, SMITH & TURNER BUOYANT AMID DOWNTURN

The pubs and brewing group Fuller, Smith and Turner has announced pre-tax profits of 14.1 million pounds for the 26 weeks to September 26, an increase of 18 percent. The boost has been attributed to low interest rates, good weather and a reduction of costs, including pay. The increase in VAT and absence of some of these factors could mean that the company's success does not continue. The company also gained from acquiring seven managed pubs in the West End from Punch Taverns .

THE GUARDIAN

STATE BANKS "UNDERMINING BUILDING SOCIETIES"

Nationwide Building Society has criticised state-backed banks for distorting the savings market by pricing their accounts "uneconomically". Nationwide has announced profits down to 117 million pounds from 322 million pounds at the same time last year and has said that its commitment to keeping mortgage interest rates more closely tied to the Bank of England's interest rate has cost them more than 450 million pounds a year. Nationwide chief executive Graham Beale also said that new minimum capital amounts dictated by European law would disadvantage building societies, whereas banks would be able to source capital from shareholders.

MORE THRESHERS SHOPS CLOSE AS BUYERS LOSE INTEREST

First Quench, the group that owns Threshers and Wine Rack, is intending to close a further 381 of its stores, resulting in up to 2,000 further job losses. An initial round of closures and job losses was announced two weeks ago, but lack of interest in the purchase of the remaining stores has caused administrators KPMG to make more cuts. Richard Fleming, one of the administrators from KPMG, has said he is optimistic about selling "a significant number" of the remaining 500 stores as going concerns.

BRITISH FARMERS TO GET MORE THAN A SLICE OF THE HOVIS FLOUR

MARKET

Hovis is planning to exclusively purchase wheat that was grown in Britain. Currently Hovis uses between 25 and 50 percent British wheat with the remainder being imported from Canada. Trials of growing the Canadian strain of wheat have been conducted in Britain for the last five years and Hovis' decision will pump 18 million pounds into the British farming industry. Other big bread brands are continuing to import wheat from overseas, but Warburtons is to launch a loaf made entirely from British wheat.

Prepared for Reuters by Durrants
Keywords: PRESS DIGEST British business Nov 21

COPYRIGHT

Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.

Financial Times

BANK URGES RESTRAINT IN BOOM TIMES

The Bank of England's consultation paper into the financial crisis will conclude that new discretionary tools should be considered to help smooth the peaks and troughs of the economic cycle, even if they were only introduced in Britain. The bank's report will call for stronger measures than those in the Treasury's Financial Services Bill including the creation of "macroprudential" powers to be used as an effective way of dampening future credit booms. The main tool would be raising the capital required to be held by banks in good times, with less tight capital requirements during downturns.

ASB CALLS FOR GOVERNMENT BOND PENSIONS BENCHMARK

Britain's leading accountancy group, the Accounting Standards Board, has called for company pension liabilities to be discounted by an interest rate equal to that on risk-free government bonds. UK and international accounting standards currently call for pension liabilities to be discounted at a rate consistent with either high-quality or AA-rated corporate bonds. National Association of Pension Funds chief executive Joanne Segars described the ASB proposals as"extremely disappointing". The International Accounting Standards Board is thought unlikely to consider the proposals for several years.

PRIVATE BANKS SEEK HOME LOAN CASH DEPOSITS

Leading UK private banks are demanding upfront cash deposits from buyers seeking mortgages in excess of one million pounds as extra security against uncertain bonus income. Brokers say some private banks now require a year's worth of mortgage interest payments in advance and that this money is ring-fenced with clients unable to draw on this money until the end of the lending facility or until conditions improve. Nigel Bedford of largemortgageloans.com said: "Banks are using this to give them a little more comfort that there is money there just in case bonuses dramatically reduce."

OPPOSITION THREATENS TO BLOCK DIGITAL REFORM BILL

The Conservative and Liberal Democrat parties have threatened to block the digital economy bill unless the government makes concessions. Both opposition parties suggested on Friday that they would demand changes to legislation entered into the bill by Lord Mandelson which would affect copyright law. The Conservative party also warned that that they would oppose the reform if the government kept powers to allow the industry regulator OFCOM to use part of the licence fee to pay for regional news provided by commercial broadcasters.

FULLERS HIGHLIGHTS SECTOR SPLIT

Fullers Smith & Turner reported an 18 percent increase in pre-tax profit to 14.1 million pounds for the six months to September 26, on revenue that increased from 106 million pounds to 117 million pounds. The pub group's figures highlighted a growing divide in the sector between successfully managed operators and struggling leased and tenanted ones. Mark Brumby, analyst at Astaire Securities, said Fullers fared better than many of its rivals as most of the group's pubs are in London and the southeast. Brumby said: "Food-led managed houses have generally outperformed wet-led tenanted houses and southeast England has been outperforming the north."

L&G SEARCH FOR CHAIRMAN ENDS

Legal & General, the UK's third-largest life and pensions company, hopes to name former National Australia Bank head John Stewart as its new chairman by the end of next week. A source close to the situation said the appointment of Stewart is subject to the approval of the Financial Services Authority and the finalisation of some contractual terms. L&G is thought to be one of the primary targets of Clive Cowdery's Resolution vehicle as it looks to consolidate the insurance sector.

GARTMORE TO CUT DEBT WITH 250 MILLION POUND IPO

Asset manager Gartmore is looking to raise 250 million pounds as it makes its debut on the London Stock Exchange. The group said the proceeds of the capital-raising would be used to reduce its 400 million pound debt. Gartmore is also expected to release another tranche of shares, enabling U.S. private equity group Hellman & Friedman to sell most of its 58 percent stake. The issue is expected to be priced within the next fortnight with the listing to occur in the second or third week of December.

MORTGAGES BEFORE CURRENT ACCOUNTS AT TESCO

Tesco could introduce mortgages by the end of next year as it looks to stake a claim in the UK financial services sector. However, the supermarket group told analysts Friday that current accounts may not be offered until 2011. Tesco said: "We have said that we plan over time to extend the financial services business from a collection of successful financial products to that of a full-service retail bank. We need to build the systems and infrastructure platforms to enable us to provide these services."

RIO TINTO BOLSTERED BY U.S. COAL SALE

Miner Rio Tinto has continued its recapitalisation drive with the 741 million dollar sale of Cloud Peak Energy, a unit that comprises most of Rio's former U.S. coal business. The deal follows the 764 million dollar sale of the Jacobs Ranch mine to Arch Coal in October. Both disposals are part of an attempt to halve net debt by the end of the year from its peak of 39.1 billion dollars on June 30. The initial public offering of Cloud Peak raised 434 million dollars; a further 307 million dollars was raised through its share of a simultaneously placed offering of debt.

NATIONWIDE LASHES OUT AT RESCUED BANKS

Graham Beale, chief executive of Nationwide Building Society , has criticised the aggressive strategies of government-backed banks such as Northern Rock and Lloyds Banking Group as "seriously distorting" the savings market with "uneconomic pricing". Beale singled out National Savings & Investment's current market leading one-year bond which pays 3.95 percent interest saying: "NS&I is way outside the competitive spectrum, way, way off the scale." Nationwide revealed a 64 percent fall in underlying pre-tax profits in the six months to September, citing lower interest rates and tough competition.

Prepared for Reuters by Durrants
Keywords: PRESS DIGEST Financial Times Nov 21

COPYRIGHT

Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.

By Mark Potter

LONDON, Nov 20 (Reuters) - Tesco, Britain's biggest retailer, took a further step on its journey to become a force in banking by signing up U.S. group Fiserv to provide the technology platform for its financial services business.
The supermarket group said on Friday, the second day of presentations to investors about its ambition to grow in retail services, that Fiserv would help it to make the leap from a collection of financial products to a full-service bank.
Tesco bought Royal Bank of Scotland out of a financial joint venture in July 2008 and unveiled plans to double profits from its retail services businesses, such as banking, to 1 billion pounds ($1.7 billion) over several years.
It has since gone on a staff recruitment drive, started testing bank branches within stores and signed an insurance deal with Fortis. It is also benefiting from discontent with traditional banks following the financial market crisis.
In presentation slides on its Web site, Tesco said it has 6 million customer accounts, with its credit card business growing at an annual rate of about 10 percent, personal loans growing at 19 percent and instant access savings accounts at 28 percent.
Transactions at its travel money business are up over 100 percent, it added.
The group said its banking business would initially target its most loyal shoppers -- the 15 million members of its Clubcard loyalty scheme.
Just 10 percent of Clubcard holders have a Tesco credit card, currently its biggest financial business, while only 4.2 percent have Tesco car insurance and 2.2 percent a Tesco savings product, it said.
Some analysts have speculated whether it might be interested in buying assets from bailed-out banks like Lloyds, RBS and Northern Rock.
However, Tesco Bank chief executive Benny Higgins said on Tuesday he was focusing on organic growth, with plans to introduce a Tesco current account and possibly also mortgages over the next couple of years.
Presentation slides from banking commercial director David McCreadie said it would take time to develop the right proposition on current accounts.
Expansion into mortgages would also require the development of a broader source of funding for the bank, he noted.
Tesco said on Thursday it was also aiming to build a telecoms business generating 2 billion pounds a year of sales over the medium term.
The world's third-biggest retailer, which has around 30 percent of Britain's grocery market, is looking to retail services along with international expansion as a way of generating new, and often more profitable, revenue streams.
At 1240 GMT, its shares were down 1.1 percent at 420.5 pence, in line with the DJ Stoxx European retail index.
Fiserv provides information management and electronic commerce systems for the financial services industry.

($1=.6002 Pound)

(Editing by Jon Loades-Carter) Keywords: TESCO/ (mark.r.potter@thomsonreuters.com; +44 20 7542-2943; Reuters Messaging: mark.potter.reuters.com@reuters.net)

COPYRIGHT

Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.

LONDON, Nov 20 (Reuters) - Tesco PLC: