Below are the key morning and weekend press headlines, featuring the The Times, The Telegraph, The Daily Mail & more - see the full Press section here.
Petrol prices are expected jump at least five pence per gallon in the wake of surprise missile attacks on crucial Saudi oil refineries, with further hikes in the pipeline if emergency engineering works cannot contain the threat to global energy supplies. Markets are braced for a spike in the cost of crude tomorrow, and analysts expect the costs of the crisis to be felt at the pumps almost immediately. Ashley Kelty, an oil and gas analyst at Cantor Fitzgerald, said he would expect petrol prices to jump “at least 5p per gallon in the coming days and further hikes to come as news comes out on the longer term impact of the Saudi outage”. Two crucial facilities run by state-owned Saudi Aramco were shut down by missiles launched from drones on Saturday. The loss of the Khurais oil field and nearby Abqaiq oil processing facility, which is one of the largest in the world, has cut the Kingdom’s production capacity by half. The strikes took out about 5.7 million barrels of oil per day of output, equal to around 5% of global supply. Figures released in August suggested Saudi Arabia’s total production stood at just under 10 million barrels per day.
Sainsbury (J) (SBRY) mortgage business could fetch £1.3bn if the grocer finds a buyer. The supermarket chain is in talks with advisers as it explores a sale of its mortgage book. A review of the company’s financial services arm was kick-started by Martin Scicluna after he joined as chairman last November. The Sunday Telegraph revealed last week that the supermarket chain was examining a major overhaul of the bank as it prepares to lay out a new strategy to City analysts and investors on Sept 25. Tesco bagged £3.8bn for its mortgage book from Lloyds earlier this month, just £100,000 more than its actual value. An industry source, however, said that Sainsbury’s could struggle to sell because its costs are too high, something the supermarket chain rejects. Sainsbury’s, led by chief executive Mike Coupe, is under pressure to get back on the front foot after its merger with Asda was knocked back by competition watchdogs in the spring. Sainsbury’s Bank has been weighing on the supermarket chain’s profits and consuming cash for years. It made a loss of £34m last year, compared to a profit of £25m the year before.
Next (NXT) is expected to remain a bright spot in Britain’s battered retail sector as rising online sales counter tougher trading in shops. The high street bellwether is poised to post a 4% jump in full-price sales when it announces half-year results on Thursday. That rise will be underpinned by a 12% surge in online sales for the six months to July 27, with in-store non-discounted sales dropping 4% over the period. Shares in Next have soared 45% to £60.60 since the start of the year, valuing the chain at £8.1bn, as it has weathered the turmoil engulfing the retail sector better than its rivals. Chief executive Lord (Simon) Wolfson said in July that the decline in its bricks-and-mortar shops “hasn’t been nearly as bad as we thought”.
The American boss of Drax Group (DRX) has made several trips to Louisiana to investigate whether bagasse — a residue from sugar cane — could help fuel Drax’s power station in North Yorkshire more cheaply than the sawdust and tree thinnings that have replaced coal in four of its six turbines. His trips are urgent: the giant power station, which supplies up to 6% of the UK’s electricity, is dependent on subsidies that will end in 2027. While coal plants have been closing apace, Drax has clung on by swapping to wood chips. That may not last. The finite subsidies bring the business some £800m a year — a fifth of its £4.2bn revenue. One of its turbines is guaranteed £100 per megawatt hour (MWh), well above the current electricity wholesale price of £35 per MWh. “Biomass has a long-term role to play,” insists Gardiner, the former finance chief promoted to chief executive at the start of 2018, “but it has to be economically viable”.
The Hong Kong stock exchange is set to go hostile with its £30bn bid for the London Stock Exchange Group (LSE) after its offer was rejected on Friday. LSE said earlier it had concerns about the key aspects of Hong Kong Exchanges and Clearing’s (HKEX) proposal, which had “fundamental flaws” around its structure and value. Hong Kong quickly fired back, arguing that the proposed deal represented “a highly compelling strategic opportunity to create a global market infrastructure leader”. HKEX bosses said they hoped to enter into a “constructive dialogue” with the LSE board and were “disappointed” that it had “declined to properly engage”.
FirstGroup (FGP) is poised to offload part of its bus business to its own managers amid mounting industry concern of a shake-up by politicians. A string of management buyouts are said to be the frontrunners vying for First’s bus operations in Bristol, Dorset, Devon and Cornwall. A similar swoop by managers is also being pulled together in East Anglia. First put its entire UK bus arm up for sale earlier this year alongside North American coach arm Greyhound, following pressure from its biggest shareholders. The largest of these, activist Coast Capital Management, launched a campaign over the summer to oust half of the board. While Coast failed to attract majority shareholder support, First’s chairman and two other directors would later step down. Some investors want the company to also exit UK rail and concentrate on more profitable operations in the US.
Millennium & Copthorne Hotels (MLC) is to be taken private by its majority shareholder in a £2.23 billion deal, bringing down the curtain on its 23-year stint on the London Stock Exchange. Kwek Leng Beng, its Singapore-based chairman and 65.2% shareholder, declared his recommended 685p-a-share offer unconditional after securing backing from investors speaking for 58.3% of the shares that he does not already own. His offer, valuing the company at £2.9 billion, was launched in June, 18 months after an earlier bid pitched at 620p a share had been rejected by minority shareholders.
Ovo is set to become the UK’s second largest energy provider after it agreed to buy SSE’s retail business for £500million. SSE (SSE) is currently the third largest energy provider, supplying around 3.5million households across the UK. Ovo entered the market as a relative minnow, but has already grown to become the UK’s largest independent supplier, providing energy to 1.5million customers. After taking on SSE’s customers, it will have a customer base of around 5million people, making it second only to British Gas. The transaction is expected to be completed in late 2019 or early 2020 with SSE saying it will do everything to make sure it is a ‘smooth transaction’ for existing customers.
Thomas Cook Group (TCG) has secured an extra week to hammer out a £1.1bn rescue deal, as debt speculators pile pressure on the troubled holiday company. A meeting had been scheduled for Wednesday to agree terms but is set to be pushed back until next week as Thomas Cook battles to survive. The rescue deal needs the support of 75% of creditors to go ahead. Hedge funds are thought to control enough of Thomas Cook’s bonds to block the rescue and are pushing for a default unless their demands are met. Concerns are growing the world’s oldest tour operator could collapse, with hundreds of thousands of holidaymakers facing uncertainty unless it can strike a deal. Regulators at the Civil Aviation Authority are making contingency plans for what would likely be the biggest ever repatriation of British holidaymakers trapped overseas if an agreement cannot be struck.
The American predator on the brink of snapping up British defence giant Cobham (COB) has slashed hundreds of jobs and extracted millions of pounds from other UK companies it has bought, The Mail on Sunday can reveal. Documents analysed by this newspaper show Advent International cut nearly 800 jobs last year at British firms – all within its first year of ownership – and paid itself a $300 million (£240 million) dividend from another firm. The revelations will spark fresh fears about Advent’s plans for Cobham on the eve of a crucial vote to determine the fate of the historic defence company. Advent, a US private equity giant, is trying to convince shareholders and critics including Lady Cobham – the daughter-in-law of Cobham’s founder – that it will be a responsible owner, preserve jobs and invest in the firm. But last night, Lady Cobham, who has urged Defence Secretary Ben Wallace and Business Secretary Andrea Leadsom to intervene, said The Mail on Sunday’s revelations about Advent’s recent track record should be a ‘deafening alarm bell’ for the Government.
The investor made famous by the Hollywood movie The Big Short has placed bets against British banks Standard Chartered (STAN) and HSBC Holdings (HSBA) in a bid to cash in on the Hong Kong crisis. Eisman, who made his name betting that the US housing market would crash just before the financial crisis of 2008-9, said both were bets on the ‘risks in Hong Kong’ and rising violence in the former British colony. His newly formed Absolute Alpha Fund has taken out a short position worth about £1.4 million against Standard Chartered, according to analysts at short-selling expert Breakout Point. It is one of the fund’s largest short positions – a trading tactic where investors borrow shares from another for a fee, sell them, and hope to buy them back later at a lower price, pocketing the difference before they are returned to their original owner.