Weekend press round up, 4-5 June

Please see below M&C Report’s round up of this weekend’s papers: Rivals target Foster’s Foster’s has emerged as a potential £7bn takeover target for North American brewer Molson Coors and Mexico’s Modelo. Shares in Cascade brewer Foster’s shot up amid speculation that banks including Bank of America and Deutsche Bank were helping Molson and Corona maker Modelo arrange financing for a possible offer. Foster’s is not believed to have received a direct approach but has been widely tipped as ripe for a bid since announcing plans last year to spin off its wine business. UK-listed Peroni and Grolsch group SABMiller is another possible buyer, although analysts said the strength of the Australian dollar would dilute the attraction of Foster’s high margins. Broker Bernstein said: “We think it highly likely that SABMiller has looked closely at buying Foster’s in the past and will no doubt re-examine a potential deal at regular intervals.” Ratings agency Fitch added: “SABMiller enjoys excellent financial flexibility and the forthcoming management changes might open the door to a more acquisitive strategy.” Daily Express Weaker services growth deepens economic gloom A slowdown in services sector growth on the heels of disappointing manufacturing figures has hardened expectations that an interest rate rise from 0.5% will be delayed. Today's Markit/CIPS survey of the services industry showed activity slowed to 53.8 in May from 54.3 the previous month. Earlier this week, a similar update on the manufacturing sector showed a fall to 52.1 in May, from a downwardly revised 54.4 in April – well below the 54.1 consensus forecast. A reading of above 50 indicates growth, while a figure below that means a contraction. The run of bank holidays in April is likely to have caused some lost momentum, but economists said the findings on services added to the recent largely disappointing news on the UK economy. Daily Mail Independent The Times Celebrated gastropub falls victim to rebranding The business model for pubs favoured by the City in recent years is the managed house: controlled by a central operator, often branded and able to offer cash-conscious consumers both consistency and value for money. But not all customers share investors’ tastes, according to a piece in the Financial Times, particularly not those who frequent The Engineer in Primrose Hill. One of London’s first gastropubs, it boasts a celebrated menu and unique atmosphere – not least because Gwyneth Paltrow, Jamie Oliver and Jon Snow are regulars. It is to locals’ horror, then, that the pub has been caught up in the vogue for the managed model. The publicans, painter Abigail Osborne and actress Tamsin Olivier, who took on the lease in 1994, have learnt that their landlords, Mitchells & Butlers (M&B) will not be renewing it. The company instead plans to make the property a managed house. It is a decision, says M&B consistent with its strategy of becoming a pure-play managed pub and restaurant company. It is a disaster, say The Engineer’s fans. Comedian Harry Enfield predicts the change will lead to “a slow and inevitable decline in standards and staff until it returns to the lousy pub it used to be”. Before Ms Osborne and Ms Olivier – the daughter of Laurence Olivier and Joan Plowright – took over, The Engineer was making about £100,000 ($164,232) a year in revenues; today, that tops £1m. It pays the landlord £101,000 a year in rent and more than £100,000 a year in beer. But M&B reaps no reward from all the food and wine sold. Ms Osborne says she would happily have negotiated a new lease that gave the company a cut of those revenue streams. That offer refused, she and Ms Olivier will instead try to find a new home, narrowing in on a site in Hammersmith. FT Weekend Use your bootstraps to get up and running In a piece on self-funding the Financial Times talks to Charlie McVeigh, the founder of the three-strong Drafthouse pub chain. McVeigh says that needing to save money can create a unique character for a business. The £150,000 he spent fitting out his Battersea site was almost a third he would have had to pay outside decorators, he claims, and provided a good return on the £200,000 a year that the site now brings in in revenue. McVeigh also kept his staff costs down by offering employees a room above the pub as part of the pay package. The lack of spare case has meant that the busines has had to create a more robust business model. McVeigh claims: “It means that we can take pub sites that are failing and for no money, or very little money, we can make it look cool.” FT Weekend Novus Leisure in talks with Duke Street Novus Leisure Ltd, the company behind Tiger Tiger nightclubs and Balls Brothers wine bars, has been holding takeover talks with private-equity firm Duke Street, which recently acquired the Wagamama chain, may revive takeover talks. Discussions between the companies, which had been taking place for several months, broke off in the past 10 days, but could be revived. Novus was taken private in a £113m management buyout in 2005. Today it is owned by Barclays and Royal Bank of Scotland, which took control after a debt-for-equity swap in 2009. Novus said that the business was “trading strongly”, with double-digit sales growth over the past six months. It said the company was not for sale and was not involved in a sale process. Duke Street declined to comment. Sunday Times Osborne plan isn't working, say top UK economists Some of Britain's leading economists are warning the chancellor, George Osborne, that the economy is too fragile to withstand his drastic spending cuts and that he must draw up a plan B. Experts, including two former Whitehall advisers and two signatories of last year's high-profile letter backing the Tories' cuts, told the Observer that they have profound concerns about the direction of Treasury policy. Since the chancellor laid out his plans to balance the books by the end of the parliament in his “emergency budget” a year ago, the outlook has deteriorated markedly. Growth has gone flat over the past six months and a slew of dismal data has raised fears that the UK could be sliding towards a double-dip recession, as the US recovery wanes and the Greek debt crisis rattles the eurozone. Jonathan Portes, the director of the National Institute of Economic and Social Research, who until February was chief economist at the Cabinet Office, advising the prime minister, said: “You do not gain credibility by sticking to a strategy that isn't working.” He said that the recent slowdown in growth was partly the result of factors outside the government's control, but insisted: “It isn't just about the international environment, it’s because of the strategy the government has followed.” The Observer Food chain at risk of being poisoned by terrorist groups Food and drink sold in Britain is under a growing threat from terrorist groups which might try to poison supplies, the Government’s security advisers have warned. Manufacturers and retailers have been told that their sector is vulnerable to attacks by ideologically and politically motivated groups that may seek to cause widespread casualties and disruption by poisoning food supplies. The warning from the Centre for the Protection of National Infrastructure [CPNI], which operates as part of the Security Service, comes as experts warned the deadly E.coli outbreak in Germany has highlighted the vulnerability of the food chain and how quickly bacteria can spread. The highly virulent strain has claimed 18 lives and left more than 1,800 seriously ill, with the true number of cases expected to be far higher. A senior German doctor last night called for an investigation into the possibility that the bacteria had been spread deliberately. Klaus-Dieter Zastrow, chief doctor for hygiene at Berlin’s Vivantes hospital, said: “It’s quite possible that there’s a crazy person out there who thinks 'I’ll kill a few people or give 10,000 people diarrhoea’. It’s a negligent mistake not to investigate in that direction.” Sunday Telegraph Discount wine crippling the industry, says Pernod Ricard Britain's multi-billion pound wine market is losing its appeal as the downturn accelerates heavy discounting, according to the owner of Jacob's Creek. We're facing a decline in sales in wine," in the UK, said Gilles Bogaert, the chief financial officer of Pernod Ricard, the French drinks giant that owns one of the country's most recognised wine brands. "The wine business is less attractive than it used to be," Mr Bogaert. The fragile economic backdrop has sharpened a tendency to discount in the country's £13bn wine industry that existed before the recession hit. A litre of wine fetched an average price of £6.40 for the producer in 2005 compared with £5.95 in 2010, according to Euromonitor, a research group which tracks the industry. "It's got into a vicious circle where consumers expect a discount," said Jeremy Cunnington, an analyst at Euromonitor. "It's been exacerbated for the past two to three years," he said. Sunday Telegraph Waitrose to launch mid-priced healthy foods brand Waitrose will launch a major new grocery brand this month as the grocer continues to attempt to steal the march on its larger rivals. The Waitrose "Love Life" brand, which will debut in stores later this month, is the grocer's biggest initiative since the successful "Essential Waitrose" in 2009 and aims to highlight "nutrient-packed" foods. The new brand's logo will also be stamped on other foods across the store to highlight their nutritional value. Waitrose's marketing director, Rupert Thomas, said it was not a diet brand, but spelled a “new approach to healthy eating”. “Usually this area is seen to be about restriction of choice but Love Life is about eating more variety and more of the right things.” The new boss of market leader Tesco recently announced plans to launch new brands – although they will not carry the Tesco name – as a way of grabbing customers' attention, and Waitrose's move will put pressure on rival Marks & Spencer which is also targeting healthy eating. Part of the employee-owned John Lewis Partnership, it is expanding aggressively with plans to open 40 stores this year, including the new convenience format Little Waitrose. The warm spring has also helped, with sales up 7.3% last week. The Observer Restaurant 'served boy 12th birthday cake with naked breasts on it' A restaurant is being investigated over claims it served a ‘boob-shaped cake’ at a child’s party. The Bristol branch of American fast-food chain Hooters is said to have presented a 12-year-old boy and his friends with a cake representing naked breasts on which the words ‘Happy 12th Birthday’ were iced. They were also allegedly given ‘sexualised Hooters merchandise’. The incident last month has sparked an online petition that accuses the restaurant of breaching its licensing agreement – which bans entertainment inappropriate for children – and calls for its closure. In just three days, more than 900 people have signed the petition, including comedians Jonathan Ross and David Mitchell. Ross tweeted: ‘When I was young and stupid I’d probably have thought it was fun. Glad I’ve grown up!’ Mail on Sunday The burger that ate Britain McDonald’s now produces 100 million Big Macs a year in Britain and Ireland alone, says a piece in the Sunday Times Magazine, which takes a closer look at the process that goes into producing one. For 100 million Big Macs you need 1,390 tonnes of sliced cheese, 196 million slices of dill pickle, 7.6 million heads of lettuce and enough “special” sauce to almost fill an Olympic-size swimming pool. And you need quite a lot of beef. Every part of the process of compiling a Big Mac is precise. Thirty-five seconds to toast the bun, then you do the trimmings: 28 grams of Sussex lettuce, one slice of cheese, two bits of dill pickle, two squeezes of sauce, seven grams of reconstituted onion and a 42-second cooked burger. Sunday Times Magazine