Unilever spread thinly as Flora race narrows

Sky News has learnt that CVC Capital Partners is no longer in the running to acquire the spreads division of Unilever, leaving a two-horse race to clinch a £6bn deal before Christmas.

Sources said that Apollo Global and KKR were now the principal remaining bidders vying to acquire I Can’t Believe It’s Not Butter, Flora and other international brands.

Reuters reported on Friday that KKR was poised to win the auction after entering exclusive talks with Unilever.

CVC originally teamed up with Blackstone, another buyout firm, to bid for the unit, but saw their joint offer rejected in October.

It then made a revised solo offer but that too has been eliminated, according to banking sources.

Platinum Equity is interested in the developed markets operations of the spreads division, but it was unclear on Friday whether it remained in the auction.

Sources said that Apollo and KKR were expected to learn whether either of their bids had been successful before Christmas, with Unilever also leaving open the prospect of a separate stock market listing for its spreads business if it fails to secure a sufficiently attractive offer.

The auction is an important component of Unilever’s efforts to improve returns to shareholders, outlined earlier this year.

Unilever decided to conduct an auction of the under-performing spreads operations two months after the FTSE-100 company was targeted by an unsolicited £115bn takeover approach from Kraft Heinz, the US-headquartered food giant.

The move from Kraft Heinz sparked a hostile reaction from the Unilever board and rang alarm bells in Downing Street, where Theresa May had vowed to restrict unwanted foreign takeovers.

Paul Polman, Unilever’s chief executive, has turned to faster-growing categories for takeover opportunities, snapping up the online-based Dollar Shave Club for $1bn last year and Mae Terra, a Brazilian organic food company, among other acquisitions this year.

Sky News revealed last month that Unilever’s board had begun a formal succession planning process ahead of Mr Polman’s anticipated retirement in about 18 months’ time.

The spreads category has been in long-term decline as increasingly health-conscious consumers have turned to butter-based products.

CVC, which had been working on its bid with Sean Gogarty, a former boss of the Unilever spreads division, could not be reached for comment on Friday.

Persimmon chairman quits over bonus backlash

Invariably, it is the chief executive, the chief financial officer or the chief operating officer that carries the can.

Today, though, Persimmon has announced its chairman, Nicholas Wrigley, is stepping down following anger from shareholders over a bonus scheme that could net the housebuilder’s three top executives £200m.

Jonathan Davie, the head of Persimmon’s remuneration committee, is also stepping down.

The news comes after unhappiness at payouts due to Jeff Fairburn, the chief executive, Mike Killoran, the finance director and David Jenkinson, the managing director, under an executive share option scheme that was signed off in 2012.

Nicholas Wrigley became chairman of Persimmon in 2011. Pic: Persimmon
Image:Nicholas Wrigley became chairman of Persimmon in 2011. Pic: Persimmon

The notional sum due to the trio under the scheme, as at the end of November, was £232m. The award was described by the Financial Times last month as “even by the standards of UK boardrooms…spectacularly tactless”.

It is likely that a number of shareholders in Persimmon, the UK’s largest housebuilder by stock market value, agreed.

Royal London Asset Management, one of the few to have spoken publicly on the matter, called the scale of the remuneration “excessive” even though Persimmon’s performance had been “impressive”.

So why did the directors qualify for such large payouts?

The issue dates back to 2012. That year’s long-term incentive plan for Mr Fairburn – who was then managing director – and his colleagues paid out if the company achieved a certain level of returns to shareholders and also included provisions that discouraged management from borrowing aggressively or taking risks.

It was apparently very popular with investors at the time.

What no-one could have foreseen was the way in which the housing market recovered.

In 2012, most of the UK housing market was still in the doldrums, with sales volumes down some 37% on the 2007 pre-crisis peak.

Mortgage approvals for much of the year were even below those of 2011. And house prices were still falling, with the Nationwide house price index recording falls of more than 1% in each of the final three quarters of the year, making 2012 the second worst year (after 2009) in the last quarter-century.

What changed things was the Help to Buy scheme, launched by the-then Chancellor, George Osborne, that July.

It offered lenders cheap funding, provided they passed it on to borrowers, and much of it ended up in the housing market. With housing demand pumped up by the scheme but supply not rising nearly so strongly, house prices rocketed and so did the profits of housebuilders.

Persimmon’s earnings per share in 2016 were almost four times the 2012 number.

Few builders returned as much of these windfall profits to investors as Persimmon. A promised £1.9bn return of cash to shareholders between 2012-2021 was raised by £860m last year and by a further £77m this year. That is why the 2012 scheme has paid out as generously as it has done.

Why has this made investors so sour? Mainly because the sheer scale of the pay-outs means Persimmon is going to have to pay out millions more shares than it expected to.

Existing investors will, as a result, see their shareholdings diluted.

Persimmon said today: “The board believes that the introduction of the 2012 Long Term Incentive Plan has been a significant factor in the company’s outstanding performance over this period, led by a strong and talented executive team.

“Nevertheless, Nicholas and Jonathan recognise that the 2012 LTIP could have included a cap. In recognition of this omission, they have therefore tendered their resignations.”

Resignations of chairmen, when things go wrong, are relatively rare.

A chairman’s main role is to run the board, ensure it is functioning effectively, while also ensuring the voice of shareholders is properly heard.

Operational failings are not the chairman’s responsibility and so it is unusual for them to go in such circumstances.

That is not to say it does not happen. For example, Sir George Jefferson resigned as BT’s chairman in 1987, admitting the company was not offering a satisfactory level of service to its customers.

More recently, Sir Richard Broadbent announced in 2014 he was stepping down as chairman of Tesco, following the discovery of a £263m back hole in the accounts.

And, famously, Sir Marcus Agius resigned as Barclays chairman in 2012 after the bank admitted some of its employees had been trying to rig the Libor rate – only for the Bank of England to demand that he stay on and that Bob Diamond, the chief executive, step down instead.

Mr Fairburn, a car mechanic’s son who left his comprehensive school at the age of 17 to become a quantity surveyor, is well-liked by shareholders.

Few of them wanted him to leave. There was no choice but for Mr Wrigley to step down.

Digitally preserving Africa’s artefacts

Preserving history and sharing cultural heritage has been the main objective for museums across the globe for years. And in an attempt to bridge the gap between history and the age of high technology, the National Museum of Kenya has started a new programme to digitally preserve African artefacts.

The BBC’s Jessica Preyser has been finding out more.

Brexit deal by 2019 ‘dramatically difficult’

The stark warning came from EU Council President Donald Tusk, who was speaking after European leaders agreed to move Britain’s exit negotiations onto the next phase.

“It is still realistic and of course dramatically difficult,” he said. “For sure, the second phase will be more demanding, more challenging than the first phase.”

:: Analysis: Theresa May’s Brexit challenge

:: What to expect from the next phase

:: Talks could be extended if MPs reject Brexit deal

:: Recap: EU approves talks entering phase two

The UK flag is flying in a different direction to those of the EU

Video:What to expect in phase two of Brexit talks

Theresa May hailed the development as a key milestone which shows she is “well on the road” to “delivering the smooth and orderly Brexit that people voted for”.

But the Prime Minister is facing calls from Brussels for “further clarity” on what she wants Britain’s future relationship with Europe to be.

European leaders say “sufficient progress” has been made on the initial divorce issues – Britain’s exit bill, citizens’ rights and the Irish border.

The decision was announced by Mr Tusk following discussions lasting less than 30 minutes at a summit in Brussels.

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Video:Tusk: Progress after ‘unity’ and May’s ‘constructive effort’

He tweeted: “EU leaders agree to move on to the second phase of #Brexit talks. Congratulations PM @theresa_may.”

Mrs May left the two-day gathering early after earning a round of applause from EU leaders after assuring them of her determination to see Brexit through.

The PM triggered Article 50 – the formal process for severing ties with Brussels – in March. Under the terms of Article 50, Britain has two years to agree an exit deal with the EU.

Negotiators can now begin discussing the terms of the transition period next month, before turning their attention to the future trading relationship in March.

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Video:Juncker: Trade talks to start ‘as soon as possible’

The EU’s position on the transition was confirmed on Friday – and Brussels’ stance has provoked anger among Brexit supporters.

Under guidelines released by the European Council and agreed by leaders of the 27 remaining member states, the UK will remain under the jurisdiction of the European Court of Justice and be required to allow freedom of movement during this period, which will last for two years.

Essentially, Britain will have to follow EU rules in their entirety during the period before Brexit takes full effect.

This would hamper the Government’s ability to agree free trade deals with nations around the world.

Video:Analysis: Will May get a quick transition deal?

Conservative MP Jacob Rees-Mogg, a leading Brexiteer, told Sky News: “If the acquis, the ECJ and free movement remain we would not be in an implementation period but would still be de facto in the EU.”

He added: “I assume that Her Majesty’s Government will make its own proposals and not roll over in the way it did at the beginning of the process.”

Senior Conservative MP Crispin Blunt scoffed at the EU’s phase two guidelines, telling Sky News: “Normal bureaucratic charm. Ever wonder why we’re leaving?!”

Business groups have also put pressure on Mrs May, warning that further delays to talks on a post-Brexit trade deal could have “damaging consequences” and called for a transition to be agreed swiftly.

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Video:Brexit: ‘From love-love to love-hate’

The PM has said she wants talks on post-Brexit trade to begin “straight away”, but the EU’s guidelines seem to dash hopes of quickly moving to substantive talks.

Brussels is at the moment only willing to participate in “preliminary and preparatory discussions with the aim of identifying an overall understanding of the framework for the future relationship” after additional guidelines have been adopted at a future summit in March.

The four-page document also says that a final agreement on the future trading relationship can only be signed off once Brexit has formally taken effect.

The obstacles that lie ahead in agreeing a deal on trade are hinted at as well, with the guidelines noting that Britain wants to leave the EU’s single market and customs union.

Prime Minister Theresa May

Video:May: Brexit progress ‘on course’

Because of this stance, the EU will be required to “calibrate” its approach on trade and economic co-operation to “ensure a balance of rights and obligations, preserve a level playing field, avoid upsetting existing relations with other third countries, and … preserve the integrity and proper functioning of the single market”.

The furore caused by Brexit Secretary David Davis’ statement that the phase one deal was a “statement of intent” rather than a legally watertight agreement is also addressed.

“Negotiations in the second phase can only progress as long as all commitments undertaken during the first phase are respected in full and translated faithfully into legal terms as quickly as possible,” the guidelines say.

Turning the cactus into a cash crop

Food technologist and entrepreneur Dr Evelyn Okoth has taken the humble cactus and positioned it as an up-and-coming cash crop. From the fruit, she makes a host of products such as yogurts, jams and wine. The BBC’s Africa Business Report went along to her workplace in Nairobi, Kenya, to find out more.

Ryanair in union offer to avoid Christmas strikes

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Media captionRyanair tells Today the airline is moving to recognise unions as it’s “time for change”

Ryanair has said it is prepared to recognise pilot unions as it seeks to avoid strike disruption over the Christmas period.

Earlier this week, 79 Dublin-based Ryanair pilots had said they would strike for one day on 20 December.

The airline was also facing action by pilots in Italy, Germany and Portugal.

Ryanair has never recognised unions, but it said it would change this policy in order to avoid disruption to flights and passengers in Christmas week.

It has written to pilot unions in Ireland, the UK, Germany, Italy, Spain and Portugal inviting them for talks.

Impact, the Irish pilots’ union, said it had received Ryanair’s letter on Friday morning. It added it was considering the contents and would respond to the company before making a public statement.

Brian Strutton, general secretary of UK pilots’ union Balpa tweeted that he had also received a written offer of recognition talks from Ryanair, adding that he would respond “later”.

The carrier said it would recognise unions “as the representative body for pilots in Ryanair in each of these countries, as long as they establish committees of Ryanair pilots to deal with Ryanair issues, as Ryanair will not engage with pilots who fly for competitor airlines in Ireland or elsewhere”.

Ryanair called on the unions to cancel the planned strike on 20 December.

Pilots in Italy were due to strike later on Friday for four hours, between 13:00 and 17:00 CET (12:00-16:00 GMT).

However, following receipt of the letter from Ryanair, the main pilots’ union, Anpac, said it had suspended its walk out.

It added it had written to Ryanair welcoming the invitation to hold talks, and asking the airline to recognise cabin crew as well.

Chief executive Michael O’Leary admitted union recognition would be a “significant change” for the airline.

“Christmas flights are very important to our customers and we wish to remove any worry or concern that they may be disrupted by pilot industrial action next week,” he said.

“If the best way to achieve this is to talk to our pilots through a recognised union process, then we are prepared to do so.”

Sky and BT sign channel sharing deal
Manchester City v Manchester UnitedImage copyrightPA
Image caption The rising cost of sports rights is behind the agreement, analysts say

Sky and BT have have signed a deal to sell their channels on each other’s platforms.

Under the deal, BT will now supply its sports channels – which show UEFA Champions League and Premier League football – to Sky.

In addition, BT will be able to sell Sky’s Now TV service – which includes Sky Sports, Sky Cinema and the Sky Atlantic channel – to its customers.

The deal comes as the firms face growing competition from online rivals.

Marc Allera, the chief executive of BT Consumer, told the BBC that the deal was partly so the firms could join forces against the potential online threat.

“A lot of technology companies are coming into the market with vast budgets, and changing the market. We need to ensure our customers get the best choice,” he said.

He said the deal was a “clear indication” of the importance BT attached to how digital and TV markets were converging, adding the firm would bid fiercely for exclusive content.

Bidding is due to begin in the next Premier League football rights auction in February, and digital giants such as Amazon and Facebook could throw their hats in the ring for streaming rights.

However, Mr Allera said: “I wouldn’t say [the deal with Sky] takes the pressure off at all… we believe in holding exclusive rights.”

BT has spent more than £3.5bn on Champions League and Premier League football rights since 2012 in an attempt to compete with Sky.

Image copyrightEPA
Image caption BT has exclusive TV rights for Champions League games until 2021

Sky boss Jeremy Darroch said: “This is great news for Sky customers who will be able to access all matches on Sky and BT channels from the Premier League, UEFA Champions League and Europa League directly with a single Sky TV subscription.”

The new services will be available to BT and Sky customers from early 2019.

At present, BT customers can get BT TV via a box, an app, or online, and can only get a pared down version of Sky Sports.

Sky customers can get BT Sport at present, but only if they subscribe through BT.

Richard Broughton, research director at media analysts Ampere, called the deal “very unusual” because of the rivalry between the two firms, but said it was a consequence of the rising costs of sports rights.

“The new rights are up for renewal very soon and this is a pre-emptive shot from both companies to limit their exposure to damage should they not get key rights and also allow them to be a little less aggressive in their bidding.”

Michael Hewson, an analyst with CMC Markets, said the BT-Sky deal seemed better for BT than Sky, “given that Sky will take BT’s sport content while BT gets Sky’s sports, cinema and Sky Atlantic channel, and could even gain more access to content further down the road”.

‘Huge disruptor’

The big online firms have been part of a seismic shift in how people access content.

On Thursday, Disney announced a deal to buy a large chunk of 21st Century Fox, including its 39% stake in Sky.

Media mogul Rupert Murdoch told Sky News he was selling Fox’s entertainment assets in part due to the rise of online giants.

“[Amazon and Netflix] are growth companies… Amazon, I don’t know how much they want to do. They are spending $5bn or $6bn I believe on new programmes, but it’s basically to widen the appeal of [Amazon] Prime.

“Anyone who joins Prime seems to spend about $3,000 immediately on retail… you know, they are a huge disruptor if you look at what they’re doing.”

He said the new Fox company that remained would have the strength to bid for sports rights, but that all companies could be “threatened by big nonsensical bids from the likes of Facebook”.

Virgin Trains staff hold 24-hour strike
Virgin TrainImage copyrightPA
Image caption RMT and TSSA members have started a 24-hour walkout

Virgin rail workers are taking part in a 24-hour strike, in the first of a number of walkouts across the UK.

Rail, Maritime and Transport union and Transport Salaried Staffs Association members on Virgin Trains West Coast are striking over pay and staffing.

Virgin said it had offered a “significantly above inflation pay rise”, but unions rejected it.

Most Virgin West Coast services will still run, but Chester and north Wales will not be served for most of the day.

A replacement bus service is running between Chester and Crewe, and Arriva Trains Wales is accepting tickets between Chester and north Wales stations.

Virgin West Coast trains will not serve Edinburgh, but this station can be reached via other train operators’ services.

Passengers have been warned to check their travel arrangements before heading to the station and to expect the services that are running to be busier than normal.

Virgin Trains says if trains are cancelled as a result of the strike, tickets can be used on the service before or after.

It added tickets would be accepted by most other train companies and would also be valid for the day after the strike.

Skip Twitter post by @VirginTrains

#VTINFO If the service you’re booked to travel on today has been cancelled as result of the strike, you can use your ticket on the service before or after. If we’re not serving your station at all, your ticket will be valid with most other train operators or for travel tomorrow.

— Virgin Trains (@VirginTrains) December 15, 2017

End of Twitter post by @VirginTrains

Further strikes are planned on Virgin West Coast services on 22 December and throughout January.

RMT members are also staging action on Merseyrail, Greater Anglia, South Western Railway and CrossCountry rail in the coming weeks.

Why are the unions striking?

Both the RMT and the TSSA said the dispute is over drivers being offered higher pay rises than other staff on the network.

Image copyrightRMT
Image caption Striking RMT members were outside Euston and Glasgow stations early on Friday

Manuel Cortes, general secretary of TSSA, said: “We’re obviously happy for the drivers that they have had a decent settlement, but our members believe that they too should deserve a little more than a stand still inflation pay rise.”

RMT general secretary Mick Cash said: “We have made it clear to the company that the inequality and underhanded approach of Virgin will be fought tooth and nail.”

What does Virgin say?

Phil Whittingham, managing director for Virgin Trains on the West Coast, said the company had spoken to the unions about a 3.6% pay rise – but they want 4%.

He claims that is double the 2% national average seen across the UK this year.

“We remain open to talks with the RMT and TSSA, and urge them to call off these strikes which will cost their members pay for no gain,” he said.

Airbus chief Tom Enders to leave after power struggle
Airbus chief executive Tom EndersImage copyrightReuters
Image caption Plans to find an successor to Tom Enders are underway, Airbus says

European planemaker Airbus has unveiled a shake-up of its top management team.

Chief executive Tom Enders will not seek re-election when his term expires in 2019, the company said.

Meanwhile, Fabrice Bregier, chief operating officer and head of the commercial aircraft arm, will step down in February.

Guillaume Faury, currently chief executive of Airbus Helicopters, will succeed Mr Bregier as president of the main commercial aircraft division.

Mr Bregier had long been seen as the natural heir to Mr Enders, although there have been reports of tensions between the two. Plans to find an successor to Mr Enders are underway, Airbus said.

The company is already about to lose its chief salesman of 20 years, John Leahy, who is retiring.

Airbus said the board had acted to secure an orderly succession at the world’s second-largest planemaker, which has been beset by rivalries and abrupt changes in the past.

“We are confident we have taken the right decisions to ensure Airbus’ long-term stability and future success and we fully support Tom Enders to lead Airbus through this generational handover with our full support,” said chairman Denis Ranque.

Burger chain Byron flipped in cut-price deal

Sky News has learnt that shareholders in Byron have agreed a transaction under which Three Hills Capital Partners (THCP) will become its majority shareholder by acquiring part of the stake held by Hutton Collins.

FPP Asset Management will become a new investor in the business, which has been suffering amid rising costs and a downturn in trading at many of its sites.

The deal will pave the way for the closure of some of Byron’s restaurants, with a mechanism called a company voluntary arrangement (CVA) likely to be considered early next year.

Sources said the entire deal was contingent upon the successful restructuring of Byron’s estate.

Information distributed to potential bidders for the business indicated that 13 of its sites are loss-making or marginal, and fall into a category headed ‘exit immediately’.

A further dozen restaurants were marked for review and could be exited by a new owner “with or without a premium”, the documents said.‎ Byron trades from just over 70 sites across the UK, having opened its first restaurant in 2007.

Sources said on Friday that Byron had also secured additional working capital, with a debt restructuring being agreed as part of the rescue package.

Millions of pounds of new money will be injected into Byron to fund the plans, the sources added, although the precise sum was unclear.

Details of the deal come less than two months after Byron’s investors hired KPMG to evaluate options for their ownership of the company.

It has been struck at a massive discount to the £100m valuation attached to Byron when it last changed hands, with some insiders suggesting that it was now valued at as little as £20m.

Byron, which employs 1,800 people, closed four under-performing sites earlier this year.

Insiders pointed out that the company had not breached its banking covenants, contrary to market rumours.

It changed hands for £100m in 2013, when it operated from just over 30 sites.

Its highest-profile customer was George Osborne, who as the Chancellor attracted ridicule when he posted a picture of himself on social media eating a Byron burger during preparations for a Government spending review in 2013.

The chain has seen a downturn in trading performance in recent months amid broader pressure on the restaurant sector amid greater competition from high street and delivery-based rivals.

During the summer, Handmade Burger Co collapsed into administration, while companies including The Restaurant Group – which owns Garfunkel’s and Frankie & Benny’s – have been forced to change their leadership teams in an effort to revive their fortunes.

Byron named Simon Cope, a former Wagamama executive, as its new chief executive in September, working alongside chairman Dalton Philips, the former boss of Wm Morrison.

Byron declined to comment.