Tesco’s first half results and the SABMiller/AB InBev takeover saga and dominate the papers this morning.

On Tesco, the Financial Times (£) leads on Dave Lewis ruling out further asset sales after scrapping the sale process for its Dunnhumby data arm and cautions that the first half results “scarcely make for better reading” than last year’s £250m profit shortfall. The Times (£) says the profit slump is “not drastic enough for a large rights issue”, while The Guardian and The Daily Mail both say that Tesco is getting ready for a further of price cuts.

The FT’s Lombard column says the supermarket has been “Dunnhumbled by deal flop”, writing: “Dave Lewis now finds himself treading water in choppy seas. A year into a putative turnround, he remains a long way from land”. (The Financial Times £)

The FT also looks at Tesco’s banking arm, noting that Tesco Bank contributed a quarter of the retailer’s first half operating income. “Combining a bank with a grocer is not, it turns out, an entirely bad idea,” it says, but cautions: “But the bank could stand on its own two feet. It does not rely on its parent for financial support; it is funded by deposits and a small capital markets programme”. (The Financial Times £)

The Telegraph’s Questor column advises shareholders to sell Tesco, arguing: “Tesco insisted that its turnaround plan is working, despite profits tumbling in the first half and debt levels rising. Questor still believes the shares are overvalued, as the balance sheet is in a precarious position. A discounted equity raising now looks all but certain.” (The Telegraph)

“AB InBev’s dream of creating ’the first truly global beer company’ suffered a setback yesterday when SABMiller’s second-biggest shareholder rejected a £65 billion takeover bid by the Budweiser brewer”, writes The Times (£), which notes that key SAB investors Altria and the Santo Domingo family are split on the deal. The Financial Times (£) said the public pronouncements yesterday signified that the “smouldering takeover battle to create a dominant global brewer ignited”.

The Guardian’s Nils Pratley writes that AB InBev’s offer isn’t enough to break up SABMiller and the Santo Domingos. “A bid with a headline value of £45 a share, with the share alternative increasing in tandem, may be the level at which resistance crumbles… This deal is finely balanced – it looks a 50/50 call.” (The Guardian)

The FT says SABMiller’s Jan du Plessis faces tough task on AB InBev bid and the chairman must now balance the divergent views of his group’s two key investors (The Financial Times £), while the papers Lex column says everyone involved in the brewers’ negotiations has reason to be nervous. “It is, as former Manchester United manager Sir Alex Ferguson liked to say, squeaky bum time.” (The Financial Times £)

The Times (£) notes that the unusual structure of the takeover offer for SABMiller is designed to save Altria, its biggest shareholder, an estimated tax bill of as much as $10 billion.

The Telegraph says AB InBev boss Carlos Brito will become “the king of beers”, but asks at what price? “The AB InBev boss can afford to pay more for SABMiller – and so he should”, it writes.

The Daily Mail’s Alex Brummer focusses on SABMiller’s reach into South America and Peru in particular and concludes: “It is always good to see companies putting up a stout defence and not swooning in the face of blandishments. But if the battle is really about price, not branding and culture, the biggest pockets may eventually triumph.”

Elsewhere, Diageo has entered into a three-part asset swap with Heineken that will give the Dutch brewer global distribution rights to Red Stripe beer, but boost the London-listed drinks group’s presence in Africa. (The Financial Times £)

Poundland has hired Hilco, the restructuring group, to renegotiate all the rents with the landlords of 99p stores after its £55 million takeover of its rival. In a move that has angered some in the property industry, Hilco and Poundland are believed to have asked landlords of 99p stores for rent cuts. (The Times £)

Meanwhile, The Daily Mail has an interview with Poundland boss Jim McCarthy discussing why budget shopping is here to stay and how he plans to bring it to the internet.