Standard & Poor’s, the credit rating agency, placed GKN on credit watch for a possible downgrade.S&P said: “GKN’s business risk may be weakened by the demerger, as it reduces the group’s overall diversity of operations and increases reliance on the automotive sector.”This is of concern since more than 20 per cent of total sales volumes relate to the troubled US automotive market that is currently experiencing lower sales volumes, production cut-backs, and price pressures.”GKN and Brambles will formally combine their Chep pallet and Cleanaway waste disposal interests, which function as joint ventures. The new company, called Brambles Industries (BI) will have a dual listing in Sydney and London and will also include several other services businesses. The Australian company’s shareholders will own 57 per cent of the new entity, with GKN investors holding the rest.On the London Stock Exchange, BI will be worth about £3bn, giving it a chance of inclusion in the FTSE 100. However, analysts said £3bn was at the low end of the index, meaning that both London-listed entities could find themselves in the FTSE 250’s index of medium-sized enterprises.Sir CK Chow, chief executive of GKN for more than four years, negotiated the deal with the chief executive of Brambles, John Fletcher. Mr Chow will head BI, taking with him GKN’s finance director, David Turner. It is thought that they are moving because Brambles was left with a vacuum with the departure of its finance director and the imminent retirement of its chief executive. Marcus Beresford, a board director at GKN since 1992, will run the remainder of the company, which analysts estimated would be worth £2.5bn.Mr Beresford said: “We have a clearly defined growth strategy for GKN as a focused automotive and aerospace engineering group operating on a truly global basis.

We have the financial and management resources to move decisively .. to create shareholder value.”. With Wall Street suddenly swinging to a much brightened mood, both Microsoft and Sun Microsystems, two of the most important players in the US tech sector, came in last night with solid quarterly profits. With Wall Street suddenly swinging to a much brightened mood, both Microsoft and Sun Microsystems, two of the most important players in the US tech sector, came in last night with solid quarterly profits.
Microsoft said its businesses did “a little better than expected”. The Seattle-based software giant posted a profit of $2.45bn (£1.72bn), or 44 cents a share, compared with $2.39bn for the same period a year ago.

Analysts had been expecting about 42 cents a share.Meanwhile, Sun, the leading maker of network computer equipment, beat its own lowered profit targets for the third quarter Sales rose 2 per cent to $4.10bn, from $4bn a year ago. Operating earnings were $263m, or 8 cents a share, down from $464m. Analysts, however, had been looking for sales of $4.45bn.These and other other moderately encouraging earnings numbers might add still more momentum to the impressive stock rally taking place on Wall Street this week, boosted by the half-point cut in interest rates announced by the US Federal Reserve on Wednesday.The tech-heavy Nasdaq index closed up 102.7 last night at 2,182.1. The Dow Jones Industrial Average also extended its gains, closing up 77.9 points at 10,693.7.The numbers from Nortel, which helped trigger the collapse in tech stocks earlier this winter with an earnings warning, were in line with expectations. The company reported losses of $385m in its first quarter, or 12 cents a share It had profits in the same quarter a year earlier of $347m. The company said it saw about 20,000 layoffs between last December and the middle of this year.Other companies reporting included Ebay, the online auction house, with earnings of 11 cents, from 2 cents a year ago, and Gateway, which unveiled a large $503m loss for the quarter. Gateway said it expected to return to operating profitability in the second half of the year..

One of the United States’ biggest department store groups has emerged as a potential buyer of Brooks Brothers, the “preppy” American clothing chain put up for sale by Marks & Spencer last month. One of the United States’ biggest department store groups has emerged as a potential buyer of Brooks Brothers, the “preppy” American clothing chain put up for sale by Marks & Spencer last month.
The leading candidate is The May Department Stores Company, which runs about 400 stores in the United States and is valued at $11bn (£7.7bn) on the US stock market. The group is believed to have expressed its interest to Morgan Stanley, M&S’s adviser. Also in the frame is Federated Department Stores, which operates names including Macy’s, Bloomingdales and The Bon Marche.May’s is expected to face competition from a number of venture capital groups. It is not yet clear if Joe Gromek, Brooks Brothers’ chief executive, is seeking to mount a management buyout himself, but financial buyers are expected to be keen to retain his services.