Tesco Confirms China Merger Talks

Tesco has confirmed it is in exclusive talks over combining its Chinese operations with a major supermarket operator in the country.

While it is unclear at this stage whether a deal would mean the Tesco brand disappearing in China, Britain's biggest retailer updated investors on the talks after they were made public by Sky's City Editor, Mark Kleinman.

Its statement said: "Noting recent media speculation, Tesco Plc and China Resources Enterprise Limited (CRE) today announce that they have entered into a memorandum of understanding and are in exclusive talks to combine their Chinese retail operations to form the leading multi-format retailer in China."

Tesco said the proposed joint venture would create a business with sales of some £10bn, in which CRE and Tesco's effective interests are expected to be split 80% and 20% respectively.

The proposed deal - which would represent a significant watering down of Tesco's China operation - would involve CRE combining its CR Vanguard business, which operates 2,986 stores across China and Hong Kong, with Tesco China's 131 stores and shopping centre business.

"The intended partnership follows a series of highly successful joint ventures between CRE and other multinational corporations and is consistent with Tesco's stated strategy of focusing on profitable routes to growth in fast-growing but less mature markets," Tesco said in the statement.

"The transaction is subject to further due diligence and agreement of final terms. There is no certainty that a transaction will occur," it added.

According to Chinese media the company has failed to turn a profit in nine years in China.

Tesco recently closed its operations in Japan and in the US and it moved to improve its core UK supermarket business.

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BA Compensation After Saudi Flight Horror

British Airways has promised compensation after hundreds of Heathrow-bound passengers reportedly endured an horrific experience on a faulty plane that led to fights in Saudi Arabia.

The Boeing 747 had to return to Riyadh twice because of a recurring wing flap problem.

Describing the scenes after the second landing, passenger Dean Jones told the online Daily Mail there was "mayhem" as a BA worker tried to deal with more than 300 passengers while other ground crew allegedly "hid' in a back office.

He went on: "Fights broke out and the military turned up."

The letter to passengers from BA. Pic. Hetaf Bin Saedan

Mr Jones said that on the first return to Riyadh on Wednesday "there was screaming and crying and we hit the runway with a massive bang".

He said passengers had to make their own way to accommodation, before being told to return to the airport at 3am for a flight on the same plane that eventually took off at 8.45am.

Around 30 minutes in, the wing flap problem recurred. Mr Jones said: "This time people were even more frightened. Women were crying. People were being sick."

After landing, around 70 passengers refused to leave and called for an official to explain what was happening.

A BA spokesman said today: "We apologise to customers for their experience, and we sent a replacement aircraft to fly them to the UK.

"Our customer service teams are contacting customers directly to offer compensation, expenses and complimentary tickets as a gesture of goodwill.

"The safety of our customers and crew is always our first concern and due to a technical problem, the decision was taken to return the aircraft to Riyadh.

"Our crew and customer service teams did everything they could to care for customers, and we provided overnight hotel accommodation."

Another BA plane suffered an 'air scare' in May when an engine caught fire

The incident first began 48 hours before a BA aircraft bound for Hong Kong returned to the airport because of technical problems understood to involve the left wing's landing gear.

In May, a BA flight caught fire as it flew over central London - leading to a dramatic emergency landing at the west London hub airport.

According to an official accident investigation, doors on both engines had been left unlatched during maintenance.

They then fell off as the aircraft left the runway, puncturing a fuel pipe on the right engine.

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RBS Gets Heated Over £230m Radiator Deal

By Mark Kleinman, City Editor

The taxpayer-backed Royal Bank of Scotland (RBS) is risking a renewed political outcry by opposing the restructuring of a major British-based manufacturer that would preserve hundreds of UK jobs.

Sky News has learnt that RBS intends to vote against a proposed takeover of Ideal Stelrad, which makes boilers and radiators, by Bregal Capital, a private equity firm, in a move which will potentially prevent a transition to new ownership.

Bregal has tabled an offer valuing Ideal Stelrad's equity and debt at roughly £230m, a sum sufficient to enable the company's senior lenders to recover their original exposure to it.

RBS, which holds approximately 15% of Ideal Stelrad's shares, is understood to be holding out for a better offer despite the fact that the group's lenders have run an auction lasting well over six months.

Bank of Ireland, another major financial institution that was bailed out by taxpayers during the banking crisis of 2008, is also said to be opposing the deal, although it speaks for only around 5% of the company's shares.

The takeover bid from Bregal is understood to require the approval of at least 75% of Ideal Stelrad's shareholders, but with time running out ahead of an initial deadline on Friday evening, support for the deal is understood to have stalled at around the 70% mark.

Although it is possible for Ideal Stelrad's board to extend the deadline, many of the manufacturer's lenders are understood to be frustrated at RBS's stance and are concerned that Bregal could withdraw its interest.

A spokeswoman for RBS declined to comment, although a source close to the bank said that several options for the future of Ideal Stelrad remained under consideration. RBS did not have the power on its own to block a deal and the bank was intent upon remaining as an investor even after a transaction, they said.

RBS has frequently encountered a political backlash over its lending activities since it was rescued by taxpayers in 2008, with complaints ranging from its choice of customers to its perceived willingness to lend to British companies seeking funds to expand.

Headquartered in Newcastle, Ideal Stelrad has manufacturing facilities in Hull and Mexborough, south Yorkshire. It employs roughly 1,800 people in the UK and at its international operations in countries including Holland, Romania and Turkey, and Bregal is understood to have indicated that it would maintain the manufacturing capacity in the UK.

Ideal Stelrad is one of hundreds of companies in which RBS ended up holding a significant equity stake after the banking crisis and subsequent recession, with these shareholdings apportioned to dedicated teams within the taxpayer-backed bank.

Insiders said that relations between Ideal Stelrad's chairman, Richard Connell, and RBS had been strained for some time.

The bank is said to have been keen for the radiator and boiler divisions of the company to be sold separately in an effort to maximise value. Insiders said on Friday, however, that profits had been in decline at the radiator unit while trade buyers had not made compelling bids for the boiler business.

Bregal is a private equity firm whose investors include the billionaire Brenninkmeijer family, founders of the high street retailer C&A. Its investments in the UK include the fast-growing education company Cognita, and Zephyr, a wind-power generator.

The prospective buyer is understood to have structured its offer to allow existing shareholders to remain owners of up to 24.9% of the company if they wish to remain exposed to it.

If Bregal does succeed in acquiring Ideal Stelrad, it would become the third private equity firm to own the manufacturer in less than a decade.

Previously called Caradon Plumbing, the company was acquired by Montagu, formerly HSBC's buyout division, for £496m in 2000. The new owners decided to break up the business, selling Twyford Bathrooms for £85m and Mira Showers for £301m, and selling the rump of the group to Warburg Pincus for £227m in 2005.

That investment went awry after Warburg Pincus refinanced Ideal Stelrad at the height of the debt boom in 2007. The company then breached its borrowing agreements and underwent a financial restructuring that culminated in a debt-for-equity swap.

The current auction is being run by BNP Paribas, another of Ideal Stelrad's shareholders. Among the other investors are understood to be HSBC, GSO, a division of the giant US investment firm Blackstone, and National Australia Bank.

BNP and Bregal, which is being advised on its bid by DC Advisory Partners, were both unavailable for comment.

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Yahoo!: Tumblr Founder Nets 'Golden Handcuff'

It has emerged that the recently completed acquisition of Tumblr by Yahoo! includes a $110m (£70.8m) payment to the Internet blogging service's founder.

The retention payment - dependent on David Karp remaining at Tumblr for the next four years - was disclosed in a regulatory filing and part of the windfall that he and Tumblr investors realised by agreeing to sell the service for $1.1bn (£700m) in May.

At the time of the sale, Yahoo! boss Marissa Mayer pledged not to make any dramatic changes at Tumblr in the hope it would not alienate the blogging service's existing users, which include a substantial number of teenagers and young adults.

As part of her promise "to not screw it up," Mayer is allowing Karp to run Tumblr independently in New York.

Karp is believed to own a stake of up to 25% in Tumblr, which means he probably has already received a windfall though no such payment from the sale has been disclosed.

Under the terms of his retention payment he must stay at Tumblr until June 2017.

It will consist of $70m in stock and options and $40m in cash, according to Yahoo's filing.

The documents also disclosed that Yahoo paid a total of $44m to buy six other companies during the three months ending in June.

All told, Yahoo paid about $1.15bn (£740m) to buy 10 companies, including Tumblr, during the first half of the year.

Yahoo has bought several other start-ups since the end of June. The prices for those deals are likely to be disclosed in another regulatory filing.

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Revealed: The UK's Most Wanted Tax Fugitives

By Poppy Trowbridge, Business and Economics Correspondent

A rogues' gallery of the UK's most wanted tax fugitives has been released in an effort to collect hundreds of millions of pounds in unpaid duty.

One year on from releasing the details of the UK's 20 most sought-after tax criminals, HM Revenue & Customs (HMRC) has now added the names and photographs of 10 more fugitives to that original target list.

Those on the list are being pursued for a range of crimes, including VAT fraud, tax evasion and money laundering.

Together, their crimes have cost the taxpayer close to £720m.

Among the new names on the list are Michael "Arthur" Fearon, who is wanted in connection with evasion of excise duty on nearly £8.4m of cigarettes, and is believed to be in the Republic of Ireland.

Chancellor George Osborne says tax evasion 'will not be tolerated'

Anish Anand, who is believed to be in the UK, is wanted in relation to £6m VAT and film tax credit fraud, while Michael George Voudouri is wanted in connection with a £10m VAT fraud. He is believed to be in Northern Cyrpus.

And Sumir Soni (aka John Soni, John Miller, Samir Soni, Bhader Singh), who is believed to be in Kenya, is wanted in connection with evading duty of £3.6m from the illegal sale and distribution of alcohol, and the illegal importation of nine million cigarettes.

Anthony Judge, who was wanted for his role in over £350,000 of tax fraud and had been on the run for 10 years, was detained at Heathrow Airport last month as he attempted to enter the UK on a forged passport.

He is the second of HMRC's most wanted to be captured since the rogues' gallery was first published.

In May, John Nugent was apprehended in the US after the authorities there saw the list.

The gallery has been viewed more than 1.5 million times, with new intelligence received from the public on the current whereabouts of 17 of the 20 named on the original list.

HMRC has also launched an interactive map of the world to illustrate where the tax fugitives are believed to be.

The crimes of those on the list have cost the taxpayer £720m

Chancellor George Osborne said: "Our message is clear, tax fraud and evasion is illegal and will not be tolerated.

"The Government has stepped up HMRC's enforcement activities to enable them to pursue tax cheats relentlessly around the world."

"This new list will help put more tax fraudsters in the spotlight and bring them to justice."

The Chancellor has faced public outrage in recent months over the number of large, multinational corporations operating in Britain that pay little or no corporation tax on earnings which can top billions of pounds each year.

Yet some tax experts say HMRC is missing the real problem in tackling tax avoidance.

Richard Murphy, of Tax Research UK, told Sky News: "The problem is very large companies who aren't paying very large amounts of tax that they might owe because of skilful tax avoidance by accountants and lawyers.

"The second problem is actually ordinary people avoiding and evading income tax by putting cash in their pockets … paying their builders, their plumbers, their cleaners, their tutors and everybody else without tax being paid and that is a massive problem in our economy.

"But the big problem is not this form of crime of which this list is being published about."

Taxpayers Alliance chief executive Matthew Sinclair said part of the difficulty was with the UK's "hugely complex and fundamentally dysfunctional tax system".

He said reforming taxes to make them simpler would reduce the scope for evasion and free up HMRC resources to focus on fraud.

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Tesco Confirms China Merger Talks

Tesco has confirmed it is in exclusive talks over combining its Chinese operations with a major supermarket operator in the country.

While it is unclear at this stage whether a deal would mean the Tesco brand disappearing in China, Britain's biggest retailer updated investors on the talks after they were made public by Sky's City Editor, Mark Kleinman.

Its statement said: "Noting recent media speculation, Tesco Plc and China Resources Enterprise Limited (CRE) today announce that they have entered into a memorandum of understanding and are in exclusive talks to combine their Chinese retail operations to form the leading multi-format retailer in China."

Tesco said the proposed joint venture would create a business with sales of some £10bn, in which CRE and Tesco's effective interests are expected to be split 80% and 20% respectively.

The proposed deal - which would represent a significant watering down of Tesco's China operation - would involve CRE combining its CR Vanguard business, which operates 2,986 stores across China and Hong Kong, with Tesco China's 131 stores and shopping centre business.

"The intended partnership follows a series of highly successful joint ventures between CRE and other multinational corporations and is consistent with Tesco's stated strategy of focusing on profitable routes to growth in fast-growing but less mature markets," Tesco said in the statement.

"The transaction is subject to further due diligence and agreement of final terms. There is no certainty that a transaction will occur," it added.

According to Chinese media the company has failed to turn a profit in 9 years in China.

Tesco recently closed its operations in Japan and in the US and it moved to improve its core UK supermarket business.

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Borrowers Boost: Interest Rates Tied To Jobs

The Bank of England plans to keep the base rate of interest at its record low level until unemployment falls to 7% - unlikely for another three years.

The announcement was made by new governor, Mark Carney, at his first Inflation Report news conference where he outlined sweeping changes to monetary policy in a bid to provide more clarity to the public and financial markets.

The bank said it would keep the base rate at 0.5% unless inflation threatened to spiral out of control or there was a danger to financial stability.

Policymakers said they stood ready to buy more government bonds if additional stimulus was needed and would not reverse existing purchases while unemployment was too high.

It meant there would be no scaling back on the bank's £375bn programme of quantitative easing (QE) for at least three years.

The bank expects economic recovery to accelerate

Mr Carney said unemployment falling to 7% would mean more than 750,000 UK jobs are created, which, combined with rising wages, would represent "real improvements in the lives of people across the nation".

But the Bank suggested that growth was likely to be "weak by historical standards", even though economic recovery was "taking hold."

Inflation, the report said, was forecast to stay above its 2% target until the second half of 2015 based on market rate expectations though it was now not expected to rise above 3% this year.

The forward guidance on the likely movement of bank rate - while welcome news for borrowers - means savers face more years of weak interest on their money.

A growing number of major central banks, including the US Federal Reserve, are providing so-called forward guidance to help nurse their economies back to health.

The BoE also forecast that the economy would grow by 0.6% during the current quarter - the same as between April and June, and that growth would reach an annual rate of 2.6% in two years' time.

The Chancellor welcomed the introduction of forward guidance by the Bank in a letter to Mr Carney.

George Osborne said: "Given the exceptional economic challenges continuing to face the UK economy, I agree with you that forward guidance can play a useful role in enhancing the effectiveness of monetary policy and thereby supporting the recovery."

Vicky Redwood, chief UK economist at consultancy Capital Economics, said the Bank's guidance was a "clear steer that interest rates will stay on hold until the end of 2016 or even 2017.

"Although financial markets already expected rates to stay low for a long time, this probably exceeds their expectations," she added.

But the Bank's interest rate pledge did little to boost market confidence as the FTSE 100 Index fell as much as 1% after the announcement, although the pound gained some strength.

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'One In Four' Mums Feel Work Discrimination

More than one in four mothers feel they have been discriminated against at work while pregnant or after returning to their job, according to new research.

Two thirds also said they would advise women to wait until the last possible moment to tell their bosses they are expecting.

But the survey of almost 2,000 women found that most did not make a formal complaint about the discrimination.

The study, by law firm Slater & Gordon, questioned mothers on how they were treated before and after the birth of their child and showed some employers were still penalising women for getting pregnant.

Almost a third said they were not treated well during their pregnancy and maternity leave, while almost half were overlooked for a promotion, almost a fifth demoted, while more than a third had responsibility taken off them.

Two out of five also said younger colleagues without children were given more support and encouragement.

Kiran Daurka from Slater & Gordon said: "Despite the equality legislation in place, attitudes and working practices continue to block women in achieving their career aspirations in the UK.

"Anecdotally, we hear of mothers complaining about being put on a 'mummy track' when back at work, and this research illustrates that this is a real experience for many women."

It is illegal to sack a women because she is pregnant or on maternity leave, said Employment Minister Jo Swinson.

She said the Government was committed to supporting women's talents and that shared parental leave and pay, being introduced in 2015, "will allow couples to choose how they share care for their child in the first year after birth".

However, TUC general secretary Frances O'Grady said newly-introduced fees for employment tribunals would deter some women from tackling discrimination.

"Sadly some employers are still living in the dark ages when it comes to women in the workplace," said Ms O'Grady.

"[But] by introducing tribunal fees of up to £1,200 to take an employer to court over pregnancy discrimination, the Government has ensured that many more of these women will have to suffer in silence."

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China Trade Figures For July Beat Forecasts

China's trade outpaced expectations in July, in a possible sign that world's second-largest economy is stabilising, following a slowdown this year.

The rebound is a rare optimistic sign following fears over China's economic expansion amid weak global demand, as policymakers have tried t to cool a local credit boom.

Exports rose 5.1% compared with the same period a year earlier while imports leaped 10.9%, customs data showed.

Economists had expected growth, though at a slower rate.

China's politically sensitive global trade surplus narrowed to $17.8bn (£11.5bn).

Exports to the United States edged up 2.3% however exports to Europe contracted 2.8%.

The latest trade figure disparity further fuels signs of US green shoots emerging while Europe stagnates.

The expansion comes after trade fell in June, when exports contracted by 3.1% while imports shrank 0.7%.

China's economy grew 7.5% in the three months ending in June over a year earlier, down from 7.7% in the previous quarter, as growth in factory production and investment slowed.

Some analysts suspect growth in China could slide below 7% in coming quarters.

The latest data could help support Chinese leaders, who are facing pressure to achieve a 7.5% growth target for the year.

The target is far stronger than forecasts for the United States, Europe and Japan, but would be the country's weakest performance since 1991.

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Fair Trade Warning To Quick Home Sale Sector

The trading watchdog is urging almost 120 firms operating across the "quick house sale" sector to make sure their business practices are up to scratch.

The warning comes after an investigation found some hard-pressed customers end up handing over their home for less than half of its market value.

The Office of Fair Trading (OFT) said it has also opened formal investigations into three un-named businesses for alleged unfair practices that may have led to some customers losing tens of thousands of pounds.

People who sell their homes to a quick house sale firm usually receive between 10% and 25% less than the market value of their property in return for getting fast access to cash.

But concerns have been raised about firms reducing the price offered at the last minute when the seller has already committed to the transaction.

The OFT said it has seen firms dropping the prices they will pay by up to 53% on initial offers which were already below market price, leaving people tens of thousands of pounds out of pocket compared with the market value.

The average quick sale is estimated at around £100,000.

The regulator warned that some firms risk giving the industry a bad name by exploiting a customer's difficult financial circumstances and giving them significantly less than they were expecting.

It said seven in 10 complaints received by the OFT about quick house sales came from "vulnerable" consumers who may have been particularly attracted by claims of a hassle-free service, with no viewings or hold-ups.

These include older people who may be suffering ill health, people who are heading for repossession and need a fast route out of their debt problems and those who are under pressure to stop a property chain collapsing.

Gaucho Rasmussen, OFT Director, said: "Responsible quick house sale firms offer a valuable service to consumers who want a fast sale.

"However, we have also seen potentially illegal behaviour and as a result the OFT has opened investigations into three companies.

"When sellers get a bad deal, they could lose a lot of money. We want to ensure that consumers can have confidence in this sector and put an end to these shoddy practices."

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