DealTalk: Bmi facing break-up in battle for Heathrow

Lufthansa, which has seen loss-making bmi drag on its earnings since acquiring it in 2009, has effectively admitted turnaround efforts are stumbling, by saying it is now also seeking a partner for the airline.While it would prefer to sell the whole unit than break it up, managers have not ruled out a partial sale -- and Lufthansa sold six of bmi's daily take-off and landing slots to IAG's (ICAG.L) British Airways last month.Bmi comprises three underperforming businesses: a traditional airline serving Europe, the Middle East and Africa; bmi regional, serving the UK; and low-cost unit bmibaby.RBS aviation analyst Andrew Lobbenberg does not believe IAG, which is keen on bmi's Heathrow slots, is interested in owning or operating bmi regional or bmibaby, and puts smaller UK airlines in the frame for those."We could imagine a competing UK low-cost carrier taking bmibaby free, or in return for a contribution toward restructuring costs, running out the leases (on its 14 jets) and taking on staff and routes," said Lobbenberg."Flybe (FLYB.L) (the UK regional airline) is in our view the most logical acquirer of bmi regional. There is only one other UK regional airline, Eastern, which could be a potential buyer."With 9 percent of the take-off and landing slots, bmi is the second-largest carrier at Heathrow, Europe's busiest airport, which is now operating at full capacity after plans to build a third runway were scrapped.Citigroup analyst Andrew Light last month estimated these slots to be worth around 460 million euros ($633 million)."Around 460 million euros for the slots sounds sensible but one thing you should bear in mind is the cost the future owner of bmi would have to bear (if its bought the whole airline) as the company needs a total restructuring," said a sector banker.Interested suitors include BA and Iberia parent IAG, and the UK's Virgin Atlantic VA.UL.Abu Dhabi's Etihad Airways is discussing the possibility of making a joint bid with Virgin, according to sources in the United Arab Emirates.The successful bidder would have to spend millions to restructure bmi to stem losses, forecast by analysts at around 250 million euros this year, or sell off the individual airline units if all they wanted from bmi was the Heathrow access.The latest annual results filed by LHBD Holding, the Lufthansa subsidiary that owns bmi, showed it put 45 million pounds ($71 million) into bmi in 2010, after 95 million pounds in the second half of 2009."Bmi's business model is flawed -- it is neither a full service airline or a low-cost carrier -- and that's why it lost 145 million euros last year and is forecast to lose more this year," said Davy Stockbrokers analyst Stephen Furlong."Whoever buys it will almost certainly want to keep bmi's slots and sell the rest of the business, because it will cost millions of euros to turn it back into a profitable airline."A transport banker said Lufthansa could ease bmi's restructuring by providing part of the necessary financing."They really want to get rid of bmi to focus on the group's integration following multiple acquisitions," he said.Davy's Furlong said Lufthansa was likely to push for a sale as a whole to remove a big negative from its books."That means Lufthansa might have to take a lower price because, on one hand it is selling the slots, which it has capitalized at 515 million euros, but along with that comes a loss-making company with a 100-million pound plus pension deficit and serious legacy issues."SLOTTING INBmi, which reported a first-half loss of 120 million euros this year, will make 806 air transport movements (take-off or landing) at Heathrow in a typical week in the winter of 2011/12, equivalent to 8.7 percent of the total, according to UK aviation services group Airport Coordination Ltd.IAG's BA is the largest carrier at Heathrow with a 43.1 percent share of the slots -- ahead of Virgin in fifth with 3.1 percent -- and has most to gain if it can snap up bmi slots.Take-off and landing slots can be sold individually or in bulk, and their price varies depending on where and when they are sold. Slots at a full-up Heathrow are so valuable that Continental Airlines paid $209 million for four pairs in 2008."Buying bmi would give IAG a unique opportunity to increase its slot share at Heathrow," said RBS's Lobbenberg, the remote prospects of airport expansion."Adding bmi would allow IAG to safeguard future long-haul growth. In the short run, it would allow IAG to broaden the BA network at Heathrow and strengthen the hub function," he said.Abu Dhabi's Etihad would not be able to pursue a bid alone due to foreign ownership issues, but a partner such as Virgin could help the UAE carrier build its emerging market network."Etihad's goal is to bring traffic to their Abu Dhabi hub so it would make sense for them to expand in a hub offering connections to travel to Asia, and bmi has a corporate client base that Etihad could benefit from," the banker said.The banker added IAG was the most likely buyer because of its scale and ability to absorb bmi.While it could be better for Lufthansa to avoid selling bmi to a strong rival such as IAG, analysts said price and just getting rid of the loss-making unit would take precedence."There are competitors who are closer than others. However, if getting the right price means they have to sell it to a closer competitor, then they will probably do that," said Equinet analyst Jochen Rothenbacher.Virgin has written to the Office of Fair Trading and the European Commission requesting the sale of bmi's assets are examined to ensure competition is not eroded.However, IAG's holding is small compared with rivals at other European hubs -- Lufthansa holds two-thirds of the slots at Frankfurt, while Air France-KLM (AIRF.PA) has 59 percent at Charles de Gaulle in Paris and 57 percent at Amsterdam's Schiphol.($1 = 0.634 British Pounds)($1 = 0.727 Euros)

All options open for Louis Dreyfus - source

* Group still exploring every options - sourcePARIS/LONDON, Oct 17 (Reuters) - Commodities trading house Louis Dreyfus is not in talks with potential bidders and is still considering all its options to raise capital, a source familiar with the situation said on Monday.The Financial Times reported on Monday the French company had hired bankers to look at a listing of its commodities trading arm, or a partial sale to a sovereign wealth fund.A stock market rebound in the past three weeks has fuelled expectations some companies may revisit their listing plans, after keeping them under wraps for months as Europe's sovereign debt crisis all but killed appetite for equities.But a source with direct knowledge of the Louis Dreyfus situation said there was nothing new."There are no bid discussions at the moment," the source said, asking not to be identified. "There is no rush, the company has been private for 150 years so there is no specific timing" for changing the shareholding structure."I wonder why speculation is emerging again as there is nothing new," the source said, adding the group was exploring every option and that the bankers had been hired a year ago.Group chairman Margarita Louis-Dreyfus confirmed in March she was holding talks with the company's minority shareholders about a stock market listing, a merger or bringing in a private investor to fund future projects.Louis Dreyfus has been in a state of flux since former head Robert Louis-Dreyfus died in 2009. He left his 59 percent majority stake to a trust, and made a commitment that his heirs would buy out minority shareholders from 2012.It is not clear how Louis Dreyfus, which hired Credit Suisse as financial adviser, will finance such a move.The Louis Dreyfus group, which competes for dominance of agricultural commodities trading with Archer Daniels Midland Co , Bunge Ltd , and Cargill Inc , declined to comment on the FT report.The Louis Dreyfus commodities arm generated some $46 billion net sales last year and more than $1 billion consolidated net profit, the company said.Merger talks between Louis Dreyfus and smaller Singaporean rival Olam International Ltd failed this year. It also reportedly held merger talks with other rivals, including Glencore International .

UPDATE 1-Walmart to close Marketside stores next week

* Will keep selling Marketside branded goods elsewhere* Analyst not concerned Express will impact Dollar GeneralBy Jessica WohlOct 14 (Reuters) - Wal-Mart Stores Inc will shut its four Marketside stores next week, abandoning the concept after three years as it works on opening other small shops.Marketside marked Wal-Mart's attempt to give U.S. shoppers a quick place to buy prepared food such as roasted chicken and freshly baked bread for last-minute meals without the need for a trip to a larger grocery store or supercenter. The stores also carry produce, wine and other groceries.The world's largest retailer opened its four Marketside stores in the Phoenix metropolitan area in 2008. A year later, it started to sell some Marketside branded food in other Walmart stores, and it will continue to do so.The four Arizona stores -- in Chandler, Gilbert, Mesa and Tempe -- will close on Oct. 21, a spokesman said on Friday.Wal-Mart is not the first U.S. grocer to abandon the concept of a small shop selling prepared food to consumers looking for quick meal solutions. Supervalu Inc shut down a similar upscale concept store in Chicago, Urban Fresh, in 2009 after just over a year.Now, Wal-Mart is banking on another small-store concept, more aligned with its roots, as a potential growth vehicle in rural and urban locations where its larger shops would not work.Wal-Mart's Marketside stores, at roughly 16,000 square feet, are about the same size as the Walmart Express test format the company launched in June.So far, Wal-Mart is pleased with the five Walmart Express stores in Arkansas, North Carolina and Chicago. It plans to have 11 such stores by the end of the year."We continue to believe it will take multiple years for Walmart to perfect this concept, if ever," said Avondale Partners analyst Mark Montagna.The analyst said he does not expect the expansion of Walmart Express to hurt one of its strongest low-priced competitors, Dollar General Corp , which happens to be making some of its small stores a little bigger.Walmart Express, still in its infancy, recently came under new leadership.Anthony Hucker, who had been a Wal-Mart vice president overseeing Walmart Express, left to join Ahold's Giant Landover grocery division in September.Debra Layton, senior vice president for small formats, layouts and space productivity, is now in charge of Walmart Express.SHRINKING STORE SIZESWalmart Express stores, which range from about 10,000 square feet to 15,000 square feet, feel more like traditional Walmart stores than the Marketside shops. Walmart Express stores are stocked with groceries and some housewares. Pharmacies are included in some of the locations.Earlier this week, Wal-Mart said it would ramp up openings of its Neighborhood Market stores, which at about 42,000 square feet are much larger than Marketside or Walmart Express stores but much smaller than Walmart supercenters.The first Neighborhood Market opened in 1998. There are about 185 such stores now. Wal-Mart plans to open 80 to 100 small and medium-format stores in its next fiscal year. Most will be Neighborhood Markets. This year, it plans to open just 25 to 30 small and medium shops.The majority of Wal-Mart's new U.S. stores -- up to 120 this year and up to 135 in fiscal 2013 -- will continue to be supercenters.Even those are getting a bit smaller.New supercenters are set to be roughly 90,000 to 120,000 square feet. Walmart supercenters used to average about 185,000 square feet.

Surgery halts seizures in many epileptics: study

In the first long-term study of post-surgery epilepsy patients, British researchers found that 82 percent of them were seizure-free after one year, 52 percent had no seizures after five years, and 47 had still had none after 10 years."If the seizures aren't controlled with medication, that's where surgery should be considered," said John Duncan of the National Hospital for Neurosurgery at University College London, who led the study. "In those people, surgery has a good chance of stopping the seizures."Epilepsy is a brain disorder that affects around 50 million people worldwide, including many millions of young children and teenagers. It can cause recurring seizures, in which brain cells send out faulty signals, causing sometimes violent muscle spasms and loss of consciousness.It can be focal epilepsy, where a specific part of the brain is affected, or generalized epilepsy, where the regions of the brain involved are much more spread out.There is no cure for epilepsy, but medications can help prevent seizures in some patients. Common drugs include divalproex sodium, the generic version of Abbott Laboratories anti-seizure drug Depakote, and Trileptal sold by Swiss drugmaker Novartis AG.According to the World Health Organization, recent studies in both developed and developing countries have shown that up to 70 percent of newly diagnosed children and adults with epilepsy can be successfully treated with anti-epileptic drugs.After between two and five years of successful treatment, drugs can be withdrawn in about 70 percent of children and 60 percent of adults without relapses.Around half of epilepsy cases are focal, and in Britain, where Duncan's study was carried out surgery is generally only available for these patients -- usually only when two or three types of medication have already failed.The study, published in The Lancet medical journal, followed 615 patients for up to 19 years after their surgery.The average duration of epilepsy before surgery was 20 years. Duncan and other experts said that in the light of their findings, it was important to improve pre-surgical assessments so that suitable patients could be offered surgery sooner.Asked about the relative costs of the two approaches, Duncan said in a telephone interview that in Britain, such surgery has a one-off cost of around 13,000 pounds ($20,000). Drug therapy, in contrast, costs approximately 1,000 pounds ($1,500) a year plus ongoing costs of healthcare.In a commentary on Duncan's findings, Ahmed-Ramadan Sadek and William Peter Gray of the Wessex Neurological Center and Britain's Southampton University said doctors should change current practice to refer patients who might benefit from surgery earlier."This study validates the long-term effectiveness of epilepsy surgery," they wrote. "Clinical practice needs to change with the early referral of appropriate patients."($1 = 0.634 British Pounds)

UPDATE 2-Apple's iPhone 4S goes on sale, fans say tribute to Jobs

* Reviewers rave about Siri, but otherwise no revolutionBy Michael Perry and Isabel ReynoldsSYDNEY/TOKYO, Oct 14 (Reuters) - Apple Inc's iPhone 4S finally went on sale in stores around the globe on Friday, with fans snapping up the final gadget unveiled during Steve Jobs' lifetime, many buying the phone as a tribute to the former Apple boss."I think a lot of people are going to buy the iPhone 4S because it was the last iPhone Steve worked on," said Wil Batterham, 15, who with his school friend Tom Mosca were the first to buy the new phone in Sydney's Apple store."People are saying it was named after him, like iPhone 4S, for Steve," said Batterham, clutching his new phone.Asked what will be the first function they use on the iPhone 4S, Mosca said he would ask the new iPhone's voice-activated "personal assistant" software: "Where's Steve?".CEO Tim Cook and his executive team hope the first device launched without Apple's former visionary leader at the helm will safeguard their global market share lead.Samsung , Apple's arch-rival with smartphones powered by Google's Android software, expects to overtake Apple as the world's biggest smartphone vendor in terms of units sold in the third quarter .The iPhone 4S -- introduced to the world just a day before Jobs died -- was dubbed a disappointment because it fell short of being a revolution in design, but glowing reviews centered around its "Siri" voice-activated software have since helped it set a record pace in initial, online sales orders.Apple fans showed no disappointment in Sydney on Friday as they purchased the phone, ahead of sales in Japan, Germany, France, Britain and North America.Hundreds queued around the block of the Sydney Apple store, many rugged up against the chilly morning, as Apple staff chatted and clapped a countdown to the store opening. Apple's 13 Australian stores were the first to open their doors at 8.00 a.m. local time (2100 GMT, Thursday) to sell the iPhone 4S.The vast majority of iPhone 4S buyers at the Sydney store appeared to be existing Apple customers, many having bought the original iPhone and upgrades each time.Only one out of 10 people surveyed by Reuters was a new Apple customer . That buyer was replacing his HTC smartphone with the new iPhone 4S."I have been waiting for the iPhone 5 for a long time. But since Jobs died, I wanted to make sure I had a new iPhone with some advantages over the old," said Mark Du, referring to his concern over future Apple gadgets without Jobs at the helm.Apple said it did not release sales figures on launch day, so gauging the initial sales may be difficult. Apple said it had taken more than 1 million online orders in the first 24 hours after its release, exceeding the 600,000 for the iPhone 4, though that model was sold in fewer countries.Some analysts expect fourth-quarter iPhone shipments of as much as 30 million or more, almost double from a year ago.Apple's fifth-generation iPhone uses chips from Qualcomm Inc , Toshiba and a host of smaller semiconductor companies, according to repair firm iFixit, which cracked the device open on Thursday.SPEECH RECOGNITION A WINNERAnalysts say Apple CEO Cook needs to move out from under his former mentor's enormous shadow soon, and avoid clinging to the Jobs' mystique to preserve its brand.Apple fans in Sydney made sure to remember Jobs as part of the iPhone 4S launch, with a small flower, candle and photo shrine erected outside the glass-fronted store.The iPhone -- seen as the market's gold standard -- is Apple's highest-margin product and accounts for 40 percent of its annual revenue. It is the world's biggest selling smartphone, for now maintaining a slim market-share lead over Samsung's Galaxy, at 18.4 versus 17.8 percent worldwide.In a sign of how tough the competition is, two doors along from the Sydney Apple store, Samsung has been selling its new Galaxy SII for only A$2 to its first 10 customers each day, prompting Samsung fans to also camp out on the footpath.But analysts point to several factors in Apple's favor: a $199 price that matches up well with rival devices such as Amazon.com Inc's "Fire" tablet; availability promised on more than 100 carriers by the end of 2011, far more than its predecessors; and glowing reviews.Apple's iconic smartphone comes with a faster processor and a better and more light-sensitive camera, but little else to separate it from its predecessor. But tech experts say the real gems lie beneath the phone's familiar sleek casing.Influential reviewers Walt Mossberg and David Pogue raved about "Siri" -- a voice-command activated assistant that responds to spoken commands and questions in context, such as queries about the weather or a friend's phone number."I'm buying it mainly for the voice activated Siri, its like your own personal secretary," said Shane Gray, 42, one of the Sydney buyers.

European shares hit by heavy bank falls

"The gains in the past days have been so rapid that it almost produced a technically overbought position," said Mike Lenhoff, chief strategist at Brewin Dolphin."It could just be seen as a relatively short-term bout of profit taking and hopefully will not result in a complete reversal of the rebound that we have seen."Banks featured among the top decliners, with the European sector index down 4.1 percent led by Italian lender UniCredit , down 12 percent, on fresh concerns about its capital requirements.

Steve Jobs biography pushed up for release

The authorized biography "Steve Jobs", written by Walter Isaacson, the former managing editor of Time magazine and current chief executive of the Aspen Institute, is currently the No. 1 bestseller on Amazon's customer purchase list.Meanwhile, Bluewater Productions said it was rushing out a special edition e-book of its forthcoming comic book on Jobs.The 32-page comic titled "Steve Jobs: Founder of Apple" can be purchased on the NOOK and Kindle reading devices from Thursday. The print edition comic-book is due for release at the end of October, with a portion of the profits from both issues going to the American Cancer Society.Jobs, the charismatic co-founder and former chief executive of Apple Inc died on Wednesday in Palo Alto, California at the age of 56. He is considered to be among the greatest American chief executives of his generation.