Lloyds Banking Group has given TSB a £450m "dowry" as part of its £15bn initial public offering, the Sunday Telegraph reported. The small print of the TSB offer document reveals that Lloyds will pay up to £450m of integration costs if TSB changes its technology platform or is taken over. The unusual commitment by Lloyds is an extra positive for potential investors in TSB and could add to its attraction as a takeover target. The payment covers Lloyds' potential costs if it had built a new IT platform instead of saving money with a copy of its own system.
Tesco could be forced to announce another profit warning later this year unless the supermarket chain can stop the sales decline at its UK stores, the Sunday Times reported. Tesco is expected to report a quarterly revenue drop of 4% on June 4th, worse than the 2.9% decrease in the previous quarter. If it fails to stop the sales fall, margins and profits will suffer later this year, observers told the paper. The Sunday Telegraph said Chief Executive Philip Clarke would tell investors that store revamps and price cuts had produced signs of progress on sales growth.
Tesco has signed an agreement with House of Fraser to sell the department store group's products through its website, the Mail on Sunday reported. Chief Executive Philip Clarke will say the deal is a further step in reviving the fortunes of Britain's biggest supermarket group. Tesco hopes the link-up will be the first of a series of agreements with other high street chains for the digital era. The deal indicates Tesco's big plans for its online business could pay off, the paper said.
AstraZeneca has released encouraging trial results for drugs to fight lung and ovarian cancer, the Sunday Times reported. Tumours shrank or stabilised in 94% of cases when treated with a lung cancer drug codenamed AZD9291 in an early trial. A trial by the American National Cancer Institute found a combination of two Astra experimental drugs helped ovarian cancer sufferers live longer without worse symptoms. The results help support the decision of Astra's board to reject a £69bn takeover approach from Pfizer last month.
An activist investor has taken a stake in NBNK, the shell set up to launch a challenger UK bank, and is trying to persuade it to sue Lloyds Banking Group over the TSB sale, the Sunday Telegraph said. Crystal Amber has bought 6.26% of NBNK, which tried to buy more than 600 Lloyds branches last year in competition with the Co-operative Bank. When the Co-op bid collapsed, Lloyds decided to float TSB. Crystal Amber's agitation to sue Lloyds could be supported by Lord Levine, NBNK's former chairman, who has been highly critical of Lloyds' conduct of the sale process.
The European Central Bank is poised to cut interest rates and increase lending to smaller companies in an attempt to head off deflation, the Financial Times and other papers said. The FT reported the ECB is expected to reduce one of its interest rates below zero on June 5th. Senior ECB officials have also suggested they will propose measures to help the Eurozone's struggling small and medium enterprises. Jens Weidmann, president of the Bundesbank, plans to support the ECB's plan to help businesses in troubled sections of the bloc but his vote for a rate cut is less certain.
Neil Woodford, the star fund manager, is in talks with his former employer, Invesco Perpetual, about an off-market deal to buy the stakes in some of Britain's biggest companies that he built up at his old job, the Sunday Times said. With investors expected to withdraw billions of pounds from Invesco to put in Woodford's new fund manager, he is trying to avoid chaos for his favourite stocks such as BAE Systems and AstraZeneca if Invesco is forced to unload its stakes as funds are withdrawn.
RAC is preparing for a float that could value the breakdown company at £2bn, the Sunday Times said. Private equity firm Carlyle is close to hiring investment banks for a float that could value RAC at twice the price it paid Aviva for RAC three years ago. A sticking point could be RAC's Chairman Rob Templeman who was the boss of Debenhams when the retailer launched its IPO after a period owned by private equity.
Centrica has suffered the departure of another senior employee with the resignation of mergers and acquisitions head Russell Alton, according to the Sunday Times. He stood down in the last few weeks to join Norwegian state oil company Statoil. Last week, Chris Weston, who headed Centrica's British Gas business, quit to head Aggreko, depriving Centrica of a potential successor to departing Chief Executive Sam Laidlaw.
Top institutional investors have called on regulators to stop sub-standard foreign companies from floating in London, the Sunday Telegraph reported. The Association of British Insurers (ABI) led a delegation to the Financial Conduct Authority demanding better protection for investors from "junk companies". The ABI made its point after a series of scandals at Bumi, Essar Energy and ENRC, where dominant shareholders acted against the interests of minority investors. The ABI said recent rule changes designed to protect investors against such scandals did not go far enough.
OneSavings Bank will become the first challenger UK lender to list on the stock exchange this week, the Sunday Times said. The bank, owned by private equity firm JC Flowers will be valued at £100m less than planned but it will press on with its listing despite faltering investor appetite for new offerings.