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BUSINESS &MONEY July 16, 2017 · thesundaytimes.co.uk/business

thesundaytimes.co.uk/money

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Unilever is locked in a £2bn battle with the American owner of Spam to buy Reckitt Benckiser’s food business. The Anglo-Dutch conglomerate behind Persil and Ben & Jerry’s is among a pack of food giants to have tabled a bid for the Reckitt operation — home to brands including French’s mustard. Reckitt is rushing to offload the unwanted food division after receiving a series of

knockout bids in recent weeks. Binding offers for the business are expected in the next few weeks — just four months after The Sunday Times revealed Reckitt’s plans. Unilever faces strong competition from Hormel Foods, a New York Stock Exchange-listed company that owns Spam, the canned meat brand. A host of other companies are also predicted to lodge final-round bids, including McCormick & Co,

the owner of Schwartz spices, and Pinnacle Foods, owner of Birds Eye, though Unilever and Hormel are likely to have the most firepower in any bidding war. Fierce competition in the auction is expected to drive the takeover price to beyond £2.2bn, sources said, a figure that would exceed initial City expectations. Wall Street investment bank Morgan Stanley is handling the sale. Reckitt’s shares closed at £77.44 on Friday, giving the

Freeze minimum wage, urge bosses

company a market value of £54.3bn. Sales at Reckitt’s food division increased by 5% last year, though profit margins narrowed. French’s is the jewel in its crown, with sales of more than 160m bottles a year in more than 50 countries. The food arm also includes Frank’s Red Hot sauces, another popular American product. A sale would help Reckitt — the owner of brands from Durex condoms to Nurofen

painkillers — pay off debt used to finance its $18bn (£13.7bn) takeover of the baby food maker Mead Johnson. Reckitt swooped on the business this year to boost its flagging growth prospects. City analysts have predicted the food sale could act as a precursor to Reckitt selling its homecare division, which comprises numerous brands including Calgon. If Unilever succeeds with its offer, it would be the first big deal struck by the

company since it fought off a £115bn takeover raid by Kraft Heinz in February. Despite maintaining its independence, Unilever has been stirred into action by investors, unveiling a €5bn (£4.4bn) share buyback programme and pledging to sell its margarine and spreads division for £6bn. The spreads business is likely to be sold later this year, City sources said, with private equity firms expected to gobble up the division. EMMANUEL DUNAND

ITV LANDS AIRLINE BOSS

Bosses are calling for a freeze in the minimum wage amid the latest signs that Brexit fears are holding back investment by businesses. Increases in the national living wage — currently £7.50 an hour for workers aged 25 and over but set to rise to about £8.75 by 2020 under Conservative plans — could prevent firms from growing or lead to job losses, according to the British Chambers of Commerce (BCC). More than 40% of companies have cut back on planned investments because of the Brexit vote, according to a new survey by the CBI. Less than 1% are spending more than they otherwise would have. Both reports highlight how an inflationary squeeze and rising uncertainty since last year’s EU referendum are making life difficult for businesses. The BCC said planned rises in the living wage would add to the pain. It is calling for a freeze in real terms, which it says would equate to a 2.7% rise in the next year — with even slower increases in the minimum wage for younger workers. The business group argues that firms are already under pressure as skills shortages drive up wages and the fall in sterling since the EU referendum drives up the cost of many raw materials. “Recent uncertainty over Brexit suggests that the pace of planned increases needs to be reviewed,” said the BCC in a submission to the Low Pay Commission, the independent body that advises the government on minimum wage levels. “Any further increases to the wage floor must be sustainable to avoid damaging impacts on business growth and survival, and corresponding job losses.”

National Grid has handed its new boss a £497,000 relocation allowance — to work in London rather than Warwick. John Pettigrew pocketed the cash after taking over as chief executive of the power transmission network in April last year. The 48-year-old previously ran its British division and was based at its headquarters in Warwick. As head of the FTSE 100 giant, which has operations in North America, Pettigrew now works from its office on Trafalgar Square. The allowance covered travel expenses between London and the Midlands, a short-term let and the stamp

which Amazon has so far failed to crack. It now has its sights on the small but fast-growing market for meal kits — boxes of prepared ingredients, with an accompanying recipe, to be cooked in the home. The kits are increasingly popular with time-pressed Millennial workers. Blue Apron is currently the largest meal-kit provider in the US, followed by the German-owned HelloFresh, which has a growing business in Britain. The five-year-old Blue Apron floated in New York last month, but its market value has plunged by a quarter to $1.4bn amid concerns over rising losses.

duty on a property he has bought in the capital. His family home is in Leamington Spa, one hour and 10 minutes from London by train. The generous perk could provide ammunition for critics of gas and energy distribution companies. In a damning report last week, Citizens Advice said network owners had made £7.5bn in “unjustified” profits over the past eight years. Last year Pettigrew was paid £4.6m — up from £1.6m the previous year — thanks to a bumper payout from a long-term bonus plan, according to National Grid’s annual report. The chief executive’s base salary was bumped up last month from £825,000 to £899,250 — a 9% rise.

Rowland accuses aide of blackmail over prince

The CBI’s Rain Newton-Smith: ‘Today’s investments are tomorrow’s jobs’

Economic Outlook, page 4

Amazon is stepping up its assault on America’s $780bn grocery market with plans to deliver meal kits to customers’ homes. The internet retailer has registered a trademark in the US for a new service called “We do the prep. You be the chef ”. It will cover “prepared food kits . . . ready for assembly as a meal”, according to its application. The move comes just weeks after Amazon splashed out $13.4bn (£10.3bn) on Whole Foods, the upmarket grocery chain with several outlets in the UK. The acquisition was chilling for the US food retail industry,

Simon Duke

Annual growth in average weekly pay has slowed to just 1.8%, well below the rate of inflation. Slower pay rises for the lowest-paid could deliver a further hit to fragile consumer confidence. The CBI said moves in exchange rates, the prospect of tariffs on EU trade or reduced access to European workers and general uncertainty over Britain’s future relationship with the EU have all had a negative impact on investment decisions. “An overwhelming number of those that did report an impact [from Brexit] said it was negative,” said CBI chief economist Rain Newton-Smith. “Government

must do all it can to reverse this. Today’s investments are tomorrow’s jobs.” The CBI has called on the government to keep Britain in the EU’s single market and customs union for as long as it takes to hammer out a new trade deal with Brussels, in order to reduce uncertainty. The prospect of a “softer” Brexit has led one influential economic forecaster to upgrade its growth outlook for next year and 2019 to 1.3% and 1.8% respectively. EY Item Club previously forecast growth of just 1.2% and 1.5%. However, Item Club downgraded its forecast for this year to 1.5% from 1.8% because of the inflationary pressures hitting consumer demand.

Simon Duke

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Grid chief’s £497,000 for move to London

Warning of job losses as firms slash investment over Brexit fears Tommy Stubbington

HOW TO BURN CASH IN BERLIN PAGE 12 APPOINTMENTS PAGE 12 PUZZLES PAGE 18 Amazon ready to cash in on boom in meal kits

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Unilever fights Spam for £2bn Reckitt mustard Daniel Dunkley

TECH

Oliver Shah

Simon Duke ITV is poised to anoint the easyJet boss Dame Carolyn McCall as its new chief executive. The 55-year-old, who has run the airline since 2010, will replace Adam Crozier, who stood down last month. ITV’s raid on the easyJet boardroom — which could be unveiled as soon as tomorrow — comes at a time of growing turbulence for British airlines. The plunge in the pound since the Brexit vote has inflated carriers’ fuel bills and

made foreign trips more costly for Britons. There are also fears flights to the Continent could be suspended if the UK fails to strike a deal with Brussels on the aviation industry. McCall, pictured above, joined easyJet seven years ago. Since then, its market value has more than trebled to £5.6bn. She was paid £1.5m last year, compared with Crozier’s £3.4m. At ITV, McCall will also face an industry in the midst of great change. Britain’s largest freeto-air commercial broadcaster has been hit with a slowdown

in advertising income and is being challenged by streaming services such as Netflix. In response, ITV has bulked up its production arm. McCall and the ITV chairman Sir Peter Bazalgette are expected to continue buying smaller production houses. McCall, a former chief executive of Guardian Media Group, has previously served as an independent director at Lloyds bank and Tesco. In 2008 she resigned from the supermarket’s board after it sued The Guardian for libel.

The reclusive Tory donor David Rowland has accused a former business associate of trying to blackmail him with an archive of emails between his son and Prince Andrew. Rowland and his eldest son Jonathan have been embroiled in a legal fight with Michael Wright, a former lawyer who worked for them between 2008 and 2013. Wright alleges that David Rowland promised him an option over 5% of Banque Havilland in Luxembourg, then reneged and said: “You’re not having a carried position on the f****** bank for ever.” The Rowlands deny Wright’s claim and have tried

to portray him as a “slippery solicitor”. During a High Court trial, which ended on Thursday with judgment reserved, Jonathan said Wright had come into the “wrongful possession” of more than 30,000 emails from his personal account. David said these included exchanges with the Duke of York, one of Banque Havilland’s clients. David said Wright had contacted him before the trial and offered to share the emails, which he took as a “threat”. Wright denied wrongfully obtaining emails or attempting blackmail. He said he was trying to “create a link” of communication. Spotty’s wacky world, page 9


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