Wednesday morning business bulletin

Sep 24 2008 By Andrew Mernin

French group EDF today agreed a £12.5bn takeover of British Energy in a move set to kick-start the UK’s nuclear power strategy.

The state-owned utility giant will pay 774p a share, 9p higher than the price offered in July which was rejected as too low by major British Energy shareholders.

British Gas parent Centrica is also in talks to buy a 25% stake in the new British Energy following the deal, it was confirmed today.

Prime minister Gordon Brown welcomed news of the takeover as ``good value for the taxpayer and a significant step towards the construction of a new generation of nuclear stations".

Today's deal will see EDF take control of all of British Energy's (BE) nuclear power stations and play a leading role in the development of new stations in the UK, which are likely to be built on BE's existing sites.

It will also allow the UK Government to bank a multi-billion pound windfall from its 36% stake in the firm.

EDF said today it planned to build four new nuclear reactors in the UK and would maximise the potential of British Energy’s eight nuclear power stations.

But the Government has stressed that it wants other players in Britain’s nuclear power industry.

British Energy employs around 6,000 staff and produces around a sixth of the UK’s electricity.

EDF pledged to ``recognise and appreciate" the importance of BE employees and said it would safeguard their employment and pension rights.

Retailer Laura Ashley today reported higher half-year earnings as increased clothing sales offset a slump in demand for furniture and decorating products.

Underlying pre-tax profits for the 26 weeks to July 26 rose 13% to £4.5 million as group sales climbed 5.5% to £120.2 million.

Like-for-like UK fashion sales were up 6.7% but same-store sales of furniture dived 13.2% and the firm said it saw little sign of UK retail improvement.

Store openings boosted the half-year sales performance, with 20 new outlets increasing UK selling space by 11% to 835,000 sq ft. The UK portfolio comprised 225 stores at the end of July, with half of the sites being mixed product stores, 69 focused on home furnishings and another 32 being concessions.

Home accessories accounted for 28% of sales in the half year, with furniture generating 26%, decorating 24% and fashion 22% - up from 19% a year earlier.

The company said knitwear ranges achieved a third successive season of significant growth, while dresses also performed successfully.

The maker of bomb detection systems used at UK airports today said it had made strong progress after full-year profits rose 10% on a year earlier.

Smiths Group, which employs more than 20,000 people, said the haul of £380m reflected good performances from its detection arm, oil and gas specialist John Crane and its division providing communications to the military.

In the detection business, sales in the year to July 31 were up 12% to £509m after the introduction of new airport explosive detection systems.

Unlike conventional x-ray systems, the equipment captures multiple views of carry-on bags in a single sweep. Profits for the division were up 2% to £86m as a result of currency fluctuations and the timing of new contracts.

The company added that a performance improvement programme was under way to address the operational issues that have held back Smiths Medical over the past two years. The division, which employs 7,500 people and makes devices for hospitals, grew sales by 2% but posted flat profits of £128m.

The pound at 9am was US$1.8561 compared to US$1.8544 at the previous close while the euro at 9am was £0.7895  compared to £0.7937 at the previous close.