Comment & Analysis

Thursday October 29, 03:59 AM
Glance-PRESS DIGEST - Financial Times - Oct 29

Financial Times LSE CLOSES IN ON DEAL TO ABSORB TURQUOISE A new joint venture between the London Stock Exchange (LSE: LSE.L - news) and Turquoise could be finalised within as little as two weeks, pending discussions with the latter's backers. The pan-European share trading platform will be merged with the LSE's so-called 'dark pool' block trading facility, Baikal, affording the LSE a 51 percent controlling stake and bolstering its position against such rivals as Chi-X Europe and BATS Europe. Ironically, Turquoise, which launched two years ago, had also been seen as a contender to the LSE's dominance, but a lack of profitability and subsequent shareholder apathy have contributed to the exchange's decision to embark upon the move. LOVELLS IN MERGER TALKS TO CREATE TRANSATLANTIC LEGAL FIRM City law firm Lovells is rumoured to be discussing a potential tie-up with Washington-based Hogan & Hartson. The move is aimed at creating a law firm that will be slightly smaller than the UK's big four, Clifford Chance, Linklaters, Freshfields Bruckhaus Deringer and Allen & Overy, and that will have a strong litigation focus. While transatlantic mergers have historically been mostly unsuccessful, a combined Lovells-Hogan partnership, which would result in a company with combined revenue of 1.9 billion dollars, would hope to succeed through offering a different perspective to the big four. MGPA POISED FOR 90 MILLION POUND LAND DEAL Private equity group MGPA is in the final round of talks to acquire Land Improvement Holdings for 90 million pounds. MGPA has until the end of next week to take advantage of an exclusivity clause that will see it stave off a rival bid from Carlyle. Although the price of land in the UK has dropped dramatically in recent years, residential land is forecast to increase in value as the property and housebuilding markets begin to recover. Land Improvement's portfolio of land and land purchase options are believed to amount to approximately 50 million pounds. In addition, the company has about 40 million pounds in cash, although a certain portion of that is already allocated to various projects and costs. YELL USING SCHEME OF ARRANGEMENT TO RESTRUCTURE Yell is depending on a court-sanctioned scheme of arrangement to force creditors to back the group's debt restructuring plans after failing to secure the requisite 95 percent backing within the specified timeframe. Even though some 90 percent of Yell's lenders were in favour of the rescheduling, there were others who were either legally unable to submit an approval or were hoping to have their debts paid off early by refusing to back the scheme. The legal challenge, which will take approximately four to six weeks to complete, requires 75 percent of creditors by value of debt and 50 percent by number to be accepted. Shares at the directories group fell 6.16 pence to 46.34 pence. BAT FIRM ON PRICE INCREASE IN FACE OF SALES FALL British American Tobacco (LSE: BATS.L - news) has said it is to push ahead with planned price increases in 2010 despite evidence that premium brand cigarette sales are slipping as consumers switch to cheaper brands or illegally-traded cigarettes during the recession. Paul Adams, chief executive, indicated there are a number of territories where price hikes are being explored. Like-for-like volumes for the nine months to September 30, excluding acquisitions gains, dropped three percent. With BAT reporting a two percent decline for the first half in June, analysts are suggesting the company could be facing an overall decline of five percent during the third quarter. Shares fell 33.5 pence to 19.57 pounds. NANOCO MOVES TO RAMP UP QUANTUM DOTS An anticipated increase in business has led quantum dot manufacturer Nanoco to ramp-up its manufacturing operations. The company intends to enter joint development agreements with multinational electronic companies, providing raw material and claiming royalties on each product. Nanoco is currently the only company able to produce quantum dots -- fluorescent semiconductor nano-particles used to create light sources such as LEDs and mobile phone displays -- without the use of cadmium. Results released on Wednesday show revenue of two million pounds for the year to the end of July. Nanoco's broker Zeus Capital has forecast revenue of 5.1 million pounds for 2009, with earnings before interest and tax of 421,000 pounds. DIVIDEND TO DOUBLE AS CARPETRIGHT PILES ON SALES A return to sales growth has led Carpetright (LSE: CPR.L - news) to predict that its full-year dividend will more than double. Citing a boost in the housing market and the collapse of rival Allied Carpets as the reasons for the improved trading conditions, the UK's largest flooring retailer said it expected to pay a full-year dividend of about 20 pence in 2010. This figure is a marked improvement on the 2009 dividend which was cut to just eight pence in June. Despite a 10.3 percent increase in group sales in the 12 weeks to October 24 and a climb in like-for-like sales in the UK and the Republic of Ireland, Lord Harris of Peckham, group chief executive and chairman, sounded a note of caution. 'I think (Carpetright's) over the worst. I've been through six, seven of these downturns and we're always first in, first out. But I don't think the country's over the worst,' he said. VENTURE TO JOIN INDUSTRY WITH RESEARCH A new Coventry-based venture, funded by companies such as Rolls-Royce and Airbus UK, as well as 40 million pounds of public money, is being launched in a bid to pioneer manufacturing techniques and to address the UK's less-than-impressive track record for turning research into commercially viable products. The manufacturing technology centre, which will be officially announced on Thursday by Business Minister Pat McFadden, will bring academics and technical specialists together to solve practical problems. The MTC is due to open in 2011 and is expected to generate fee income from business of 13 million pounds per year. Prepared for Reuters by Durrants Keywords: PRESS DIGEST Financial Times Oct 29

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