Tuesday's business news

Lloyds TSB agrees £1bn sale of its Abbey Life business; Bakery chain Greggs warns of rising costs; Woolworths' sales boosted by wet weather.

Lloyds TSB agreed the sale of its Abbey Life business for nearly £1bn today, ending an association with the bank lasting nearly 20 years.

Deutsche Bank’s £977m acquisition comes after an auction which reportedly attracted interest from the likes of Pearl, closed funds specialist Resolution, and reinsurer Swiss Re.

Lloyds TSB will make a pre-tax profit of around £290m on the disposal.

The closed ``zombie“ life fund shut its door to new business in February 2000, but boasts assets of around £12bn with 1.2 million policies.

Bakery chain Greggs today warned it would pass on higher costs to customers after revealing the impact of the dismal summer weather.

The Newcastle-based firm said it would come under increasing pressure during the next few months as farmers increased dairy and flour prices after the severe flooding damaged harvests, compounding the current global wheat shortage.

The company confirmed it would look to recover these costs from customers, but warned that the price hikes needed to cover the increases would come at a time when consumer sentiment was already depressed by higher interest rates.

Greggs did not specify particular price rises, but indicated that increases of between 7% and 10% could be needed to cover the higher costs.

Retailer Woolworths offered some encouragement on trading today after the wet weather helped boost sales of its indoor products, such as DVDs.

The high street chain posted a 3.7% improvement in like-for-like sales in the eight weeks to July 28, compared with a 0.6% decline in the previous 17 weeks.

Woolies also said there had been a ``strong early response“ to its Worth It value range.

Shares in the company opened 6% higher, as investors looked for signs of a long-awaited trading recovery.

Sir Alan Sugar today agreed to sell his Amstrad business in a £125m deal with broadcaster BSkyB.

The Amstrad chief executive and chairman, who is majority shareholder at the set-top box maker, said he could not "imagine a better home“ for the business.

Amstrad and BSkyB already have a close relationship as Sir Alan’s firm supplied around 30% of the set-top boxes purchased by Sky in the year to June 30.

The proposal still requires the approval of the company’s remaining shareholders.

The pound at noon was US$2.0307 compared to US$2.0237 at the previous close while the euro at noon was £0.6744 compared to £0.6760 at the previous close.

For more on these and other stories see nebusiness in tomorrow's Journal.


David Whetstone
Culture Editor
Graeme Whitfield
Business Editor
Mark Douglas
Newcastle United Editor
Stuart Rayner
Sports Writer