AOL Time Warner’s book division includes the Little, Brown and Warner Books imprints and is home to authors such as Iain Banks and Margaret Atwood.Smith’s has teamed up with CinVen, the venture capital group, to provide equity capital to fund the merger. Smith’s, which has long been linked with a US publishing deal, said discussions were at a preliminary stage.Hodder Headline has a share of about 7 per cent of the UK publishing market and has been successfully moving into “own brand” books on subjects such as cooking and gardening. Smith’s said a deal with the Time Warner division would help create “one of the leading transatlantic publishers.”Smith’s is likely to face competition from Penguin, part of the Pearson media empire, and from Frank H Pearl, the founder of Pegasus Books. ZelnickMedia, an investment company founded by Strauss Zelnick, the former chief executive of the Bertelsmann music division BMG, is also thought to be interested. Random House, part of Bertelsmann, is also thought to be in the running. HarperCollins, part of News Corporation, dropped out of the race earlier this week.AOL is likely to move quickly on the deal as it seeks to cut its £18bn debt mountain.In January shares in Smith’s slumped to a 13-year low after the group announced a drop in underlying sales over Christmas. The company said it had made a deliberate decision not to match “kamikaze” pricing of CDs by supermarket rivals and concentrate on building margins instead.Richard Handover, chief executive, also admitted that an advertising campaign, which focused on brand-building rather than specific products, had not been successful.Book sales in the Christmas period were down by 3 per cent on the previous year.

This was largely in fiction where arch-rival Waterstone’s ran strong promotions.The group’s US retail operations have been struggling as the stores are based in hotels and airports where sales have suffered since the 11 September attacks.Separately AOL Time Warner is reported to be increasing efforts to sell its CD and DVD manufacturing division of its Warner Music subsidiary. Warner Music is one of the music labels linked with a possible merger with the UK’s EMI.WH Smith shares closed 0.25p higher at 246.25p, though its announcement was issued after the market had closed.. Two Aberdeen-based stockbrokers were yesterday banned from working in the UK financial services industry by the Financial Services Authority after they were found to have misused clients’ money. According to the financial regulator, Mr Scott left the country shortly afterwards and is now living in New Zealand.. AMP, the Australian financial services giant that owns Pearl and NPI in the UK, yesterday paid off its former chief executive, Paul Batchelor, with 2.1m Australian dollars (£770,000) after sacking him last year. It was left facing financial difficulties last year and has now been closed to new business.

Annual bonuses to 2 million of its policyholders have been scrapped this year, and the remaining 400,000 have had their fund values cut substantially.AMP reported a loss of A$896m for 2002, after taking a A$1.2bn write-down on its UK businesses and injecting A$1.4bn in to Pearl to keep it solvent.Shares in AMP climbed 6.5 per cent in Sydney, their biggest gain in six months, as investors welcomed the clampdown on executive payments. Peter Willcox, the company’s chairman, said the board had considered giving Batchelor nothing.”Despite protracted discussions and negotiations, Mr Batchelor and AMP have failed to reach an agreed settlement,” Mr Willcox said. “If he believes he is entitled to any additional payments, he is free to take legal action.”Mr Batchelor yesterday said he was considering the options available to them, saying that the payment does not reflect his contractual rights.. Ashtead, the equipment rental company which revealed accounting irregularities on Monday, saw its shares plunge 68 per cent yesterday after it defaulted on a bank loan. Sunbelt has been hit by the uncertainty in the United States caused by the looming war with Iraq as well as poor weather in the north-eastern states in January and February. Monday’s statement included a warning that Sunbelt would not meet its profit forecasts.Ashtead bought BET USA three years ago for £322m to expand in America. In September last year the company rejected an approach from two venture capital firms, who offered between 60p to 75p a share, valuing Ashtead at £115m.

The business is now valued at just £8m.Ashtead was founded in 1947 and rents industrial equipment such as wood chippers and mechanical diggers. It renegotiated agreements with lenders and cut debt last year after demand in the US slumped The group’s shares were down 5.25p at 2.5p.. The construction and support services company Alfred McAlpine shelved its share buyback programme yesterday as it announced profits in 2002 had halved. Shares in the company dropped 13 per cent, or 28p, to close at 187p after it said it had decided “not to continue with any further return of capital”.
The company, which bought back £23.4m worth of shares last year, blamed “fundamental changes to financial markets” for its change of heart, saying it thought it would be better to retain a “strong and secure financial position” instead.The U-turn came as the company reported pre-tax profits of £21.7m in 2002 – slightly less than half the £43.9m profit it reported a year before. Stripping out a £6.2m goodwill amortisation charge as well as a £2.3m exceptional charge to cover a legal settlement, profits were £30.2m – a 30 per cent rise. The company said it had a secured forward order book of £2.6bn, up 30 per cent from June of last year. Nearly £2bn of the order book is in its support services and investments arm.While the company confessed the building market remained “somewhat depressed”, it insisted its prospects in general looked good.