Former Cadbury Chair Warns Over Pfizer Deal

By Mark Kleinman, City Editor

The businessman who oversaw the sale of Cadbury in 2010 has warned against formal state intervention in the £63bn takeover bid for AstraZeneca, the British pharmaceuticals giant.

Speaking to Sky News, Sir Roger Carr, who chaired Cadbury for three years before its acquisition by Kraft Foods, said it was primarily the duty of AstraZeneca's executives and shareholders to decide on the fate of the bid.

And he said that ministers should only intervene in takeover situations where there was a clear case to do so based on the UK's national interest.

"In any takeover bid it is the duty of management to fight for stakeholders and value, and the responsibility of shareholders to judge when value has been achieved.

"It is not a place for government intervention unless truly in the nation's interest."

Sir Roger declined to comment specifically on the Pfizer bid for AstraZeneca or on whether preserving jobs in the UK's life sciences sector was sufficiently a matter of national interest for the Government to intervene.

His remarks came as AstraZeneca rebuffed the £50-a-share proposal tabled by its US rival, saying that it "substantially undervalued" the British company.

"The large proportion of the consideration payable in Pfizer shares and the tax-driven inversion structure remain unchanged. Accordingly, the Board has rejected the Proposal," it said in a statement.

Leif Johansson, AstraZeneca's chairman, said that a combination with Pfizer would "dilute AstraZeneca shareholders' exposure to our unique pipeline and would create risks around its delivery."

Sir Roger's intervention in the debate about a prospective sale of AstraZeneca comes four years after Cadbury was bought by Kraft in a deal which exposed political tensions about the rules governing hostile and foreign takeovers.

Promises made by Kraft on British jobs and manufacturing were subsequently reneged upon by the US food manufacturer.

The City's Takeover Code was revised in the wake of the deal to make it more difficult for bidders to force target companies into public 'bear-hugs' for protracted periods of time.

Those bidding for listed companies now have 28 days from the beginning of an offer period to make a firm takeover proposal.

Chuka Umunna, the shadow business secretary, told Sky News on Friday that he would be "amenable" to reforming the Code to provide greater emphasis on "long-term decision-making".

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US Jobless Drops To Lowest Rate Since 2008

The jobless rate in the United States fell to 6.3% in April, its lowest level since September 2008.

A total of 288,000 new jobs were created last month, more than a third up on the figure forecast by economists.

The Labor Department said job creation was picking up after the country's long winter freeze.

It said the upsurge in jobs has sent the unemployment rate down to 6.3% from 6.7% previously.

But the drop occurred because the number of people working or seeking work fell sharply.

In the US, people not seeking work aren't counted as unemployed.

American employers also added more jobs during February and March than those previously estimated.

The job totals for those two months were revised upwards by a combined 36,000.

A number of sectors in the US economy have been affected over winter, including construction and retail.

But job creation is now accelerating.

Official data showed employers added an average of 238,000 jobs during the past three months.

The figure was up more than 40%, from 167,000 in the previous three months.

Job creation also appeared to be widely spread across various sectors.

Hirings last month were broad-based and included higher-paying jobs.

The Labor Department said manufacturing gained 12,000 positions, construction added 32,000 while professional roles including accounting, engineering and technical services, were boosted by 25,100.

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The Week's Big Business Stories

Sky's Naomi Kerbel offers a round-up of what's been and what is coming up in the week's business news.

:: Monday, May 5 - financial markets closed

:: Tuesday, May 6 

Barclays will announce its first-quarter results for 2014 on Tuesday and Just Eat, the online food takeaway service, is expected to transfer to a premium listing. This level of stock market listing means the company is expected to meet the UK's highest standards of regulation and corporate governance.

:: Wednesday, May 7

On Wednesday, Lord Myners, the former City minister who has been tasked with reviewing the corporate governance structure of the Co-Operative Group, will appear in front of MPs from the Treasury Select Committee to give an update on his progress.

Also, that day Sainsbury's is reporting preliminary results.

It has already reported fourth-quarter like-for-like sales so there should not be many surprises in the results but we will get the profit figure for the year. The major supermarkets are locked in a price battle. Morrisons cut prices on 1,200 products, in a campaign launched May 1.

:: Thursday, May 8

The Bank of England will announce its latest interest rate decision. In April it maintained the rate at the historic low of 0.5%, unchanged since March 2009, and the size of its quantitative easing Asset Purchase Programme at £375bn. 

First-quarter sales and revenue from Morrisons. This is likely to have been another tough quarter as Morrisons competes with both the discounters and the other major supermarkets in cutting prices. 

Barclays will give an update on its strategy on Thursday. Analysts expect chief executive Antony Jenkins to detail a radical attack on costs, particularly in the investment banking division.

 :: Friday, May 9

On Friday, International Airlines Group, the parent company of British Airways and Iberia, along with Telefonica and O2 report first-quarter results. And annuity provider Resolution also reports first-quarter earnings that day.

It has been hit by the annuities shake-up revealed in the Chancellor's Budget, as well as the capping of pension fees and a regulatory review of the insurance sector. 

:: Missing something? Tweet your business stories to @SkyNKTweets

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Carlyle Steers RAC Group Towards £1.5bn Exit

By Mark Kleinman, City Editor

The private equity firm which owns the RAC breakdown recovery service is mapping out a £1.5bn sale or stock market listing.

Sky News has learnt that The Carlyle Group has appointed Lazard, the investment bank, to provide advice on an exit from the RAC, which it bought from Aviva, the insurer, in 2011.

Directors are understood to have taken a decision to press ahead with a process to appoint additional banking advisors at an RAC board meeting earlier this week.

Insiders said that Lazard was focused on a strategic review of the business and that it was open-minded about the timing and structure of a sale.

The RAC, founded by the Royal Automobile Club in 1897, has more than 7m members, and has about 2000 patrols which attend 2.5m breakdowns every year.

Carlyle is said to be keen to undertake a sale before that of its principal rival, the AA.

Sky News revealed in March that a group of City investors were pressing the AA's owner to consider a listing of the company despite concerns among some of them about its substantial borrowings.

The RAC, which is owned by the same private equity group as Addison Lee, the London-based taxi company, is chaired by Rob Templeman, one of the UK's most successful executives.

Its chief executive is Chris Woodhouse, with whom Mr Templeman worked at Debenhams, the department store chain.

Aviva sold the business in 2011 to focus on its core insurance operations, but was widely regarded to have undervalued the RAC by selling it for £1bn.

Last November, the RAC paid its owners a £163m dividend as it emerged that the company was on track to make £145m in pre-tax profit last year, almost double its 2010 earnings.

It recently announced the launch of its first mobile electric vehicle charging unit and has begun selling telematic tracking devices, a growing trend among motor insurers.

Carlyle declined to comment on Friday.

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The True Cost Of London's £140m Apartment

It's tempting to see the story of the £140m London apartment that just sold to a Ukrainian buyer as yet more evidence of the madness in the UK housing market.

But while there is now little doubt that the London property market is in the midst of a bubble, and that the exuberance is now spreading out around the UK, the sale of the One Hyde Park apartment is, from an economic perspective, a bit of a red herring.

The reality is that the super-prime London property market - the oligarchs and hedge fund bit of it - has begun to slow considerably in the past six months.

Aerial view of One Hyde Park (in the foreground) and the Serpentine

While multimillion-pound Mayfair properties were by far and away the fastest-growing part of the housing market a year or so ago, activity has ground to a near halt more recently, due in part to a host of tax avoidance measures brought in by the Treasury.

There are exceptions. Some buyers are still desperate to invest in London whatever the cost - the clue is this buyer's nationality.

But the reality is that the super-prime market looks far less frothy now than other parts of the capital.

Prices in Kensington and Chelsea, which not all that long ago were rising by around 30% a year, are now going up at a far more leisurely 12.8%, according to the most recent Land Registry figures.

A snapshot from within the One Hyde Park site

By contrast, the four boroughs of London with house prices rising at an annual rate of more than 20% are Islington, Lambeth, Southwark and Waltham Forest.

As often happens, what started as a boom in the multimillion-pound property sector has long since transmogrified into a boom in other, less smart parts of the capital.

And the same is starting to happen around the country: the housing boom that began in London is starting to spread out throughout the rest of the UK. Prices in the East of England are now rising by 7.1%.

While this is hardly bad news - prices fell far more outside London, so won't be anywhere near dangerous levels for some time - it poses greater threats for the financial system.

A promotional photo of an apartment at the prestigious location

A collapse in prime London house prices will be difficult for some, but many of those who can afford multimillion-pound properties have enough capital to weather the storm.

Elsewhere, the rest of us are far more reliant on mortgages to finance our homebuying - and the more we're borrowing and faster house prices are rising, the greater the risk that people could find themselves in trouble.

That's why the Bank of England's deputy governor Jon Cunliffe sounded so concerned about rising prices in his speech on Thursday night. The question is what he and the rest of the institution do about it.

At this stage, the most likely eventuality is that next month the bank's Financial Policy Committee imposes new stricter limits on the so-called stress tests mortgage companies must apply to customers before granting them a loan.

That may be followed by increases in interest rates next year. Some economists fear, though, that by then the London bubble will have become a nationwide bubble waiting to burst.

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Samsung Told To Pay Apple $119m In Patent Row

Samsung has been ordered to pay $119.46m (£70m) in damages to Apple after the South Korean company was found guilty of violating two patents on smartphone features.

In the latest lawsuit involving the two tech giants, a jury in a federal court in San Jose, California, ruled that Samsung had copied key features of the iPhone in creating its own line of smartphones, including universal searching and slide to lock.

But the verdict was a far cry from the $2.2bn Apple sought and the $930m it won in a separate 2012 trial making similar patent infringement claims against Samsung products, most of which are no longer for sale in the US.

In a counter-claim, the jury found that Apple had infringed one of Samsung's patents in creating the iPhone 4 and 5.

The jury awarded Samsung $158,400 - a fraction of the $6m sought by Samsung.

Brian Love, assistant professor at Santa Clara University's school of law, said: "Though this verdict is large by normal standards, it is hard to view this outcome as much of a victory for Apple.

"This amount is less than 10% of the amount Apple requested, and probably doesn't surpass by too much the amount Apple spent litigating this case.

"Apple launched this litigation campaign years ago with aspirations of slowing the meteoric rise of Android phone manufacturers. It has so far failed to do so, and this case won't get it any closer."

Apple said the ruling reinforced its stance that "Samsung willfully stole our ideas and copied our products".

Samsung representatives were not immediately available for comment.

The verdict marks the latest intellectual property battle between the world's top two smartphone makers.

For more than three years, Apple and Samsung have sued each other in courts and trade offices around the world.

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Miliband Urges Caution On Pfizer Takeover Bid

AstraZeneca: The Key Statistics

Updated: 11:23am UK, Friday 02 May 2014

American pharmaceutical giant Pfizer, which makes Viagra, has until May 26 to confirm its intentions in what could be Britain's biggest ever takeover. Here are some key statistics and history about AstraZeneca:

:: Pfizer's original bid earlier this year for AstraZeneca valued the company at just under £60bn.

:: Its boosted bid on May 2 valued it at £63bn.

:: AstraZeneca operates in more than 100 countries and employs 51,500 people worldwide.

:: Around 9,000 of its staff work in research and development (R&D).

:: It attracted £15.6bn of annual sales in year ending December 31, 2013, however this was down 24% in two years - from £20.4bn in 2011.

:: Reported operating profits have fallen from £7.8bn to £2.2bn, a fall of 71% over the same period.

:: Key to these falling sales and profits is the loss of exclusivity on some of its blockbuster drugs including Arimidex, Atacand, Crestor, Nexium and Seroquel IR. In 2013, the loss of exclusivity directly reduced revenues by £1.3bn.

:: The group forecast that, with new drugs coming online and its extensive acquisition activity, revenues will be back in line with its 2013 figures by 2017.

:: In the three years to 2013, it has completed more than 150 acquisitions including Pearl Therapeutics and Omthera Pharmaceuticals.

:: In 2013, it bought Amplimmune for £700m to help the group secure future products.

:: Analysts see the group battling to sustain itself in a more competitive industry, where cheaper generics eat into the profits on successful drugs post exclusivity.

:: The R&D cost and difficulty of developing new equivalent blockbuster drugs keeps growing.

:: Pfizer's previous proposal on January 5 included a combination of cash and shares which represented an indicative value of £46.61 per AstraZeneca share.

:: The bid included a substantial premium of approximately 30% to AstraZeneca's closing share price of £35.86 on January 3.

:: AstraZeneca was formed in 1999 when Sweden's Astra - which was formed in 1913 - merged with the UK's Zeneca.

:: Zeneca was created in 1993 following a de-merger from ICI.

:: Pfizer's revenues were $51.6bn (£30.7bn) in 2013.

:: Pfizer employs 78,000 people worldwide including 900 in Britain.

:: It makes Viagra and Chap Stick.

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Royal Mail Plots Bond Issue As Row Rages On

By Mark Kleinman, City Editor

Royal Mail is weighing a move into the bond markets to raise hundreds of millions of pounds even as the row over the postal operator's privatisation looks set to continue.

Sky News understands that the company has been holding talks with banks in recent weeks about a sizeable bond issue, which would be its first since last autumn's controversial stock market flotation.

Insiders said that discussions about the bond financing were at an early stage and that no decisions had been taken, but analysts predicted that the proceeds could be anywhere between £500m and £1bn.

The proceeds of a bond issue are likely to be used for general corporate purposes, and would allow Royal Mail to take advantage of favourable debt markets.

Supporters of Royal Mail's privatisation suggested on Sunday that the move was likely to be made easier by the fact that the company was no longer fully state-owned.

The Government continues to hold a 30% stake in the company, which at Friday's closing share price was worth approximately £1.8bn.

Last week was arguably the most uncomfortable for the Coalition since October's flotation.

Ed Miliband, the Labour leader, accused David Cameron of handing a select group of investors a "golden ticket" to reap profits from the privatisation at taxpayers' expense.

The Government disclosed the names of 16 so-called priority investors which influenced the decision to price the shares at 330p and which received larger allocations of stock through the IPO.

Sky News revealed that the sovereign wealth funds of Kuwait and Singapore were among these core shareholders, while the disclosure that Lazard Asset Management was also among them prompted further criticism.

That was because the advisory arm of Lazard had been retained by ministers to provide independent advice on the flotation. Its fund management operation was among those which sold shares almost immediately after they started trading, allowing it to claim an £8m profit.

There was, however, no suggestion of wrongdoing, and Lazard's UK chief executive, who testified before two select committees last week, insisted that the share trades were evidence that so-called 'Chinese walls' within investment banks were watertight.

The chief executive of the City watchdog said last week that the 38% rise in Royal Mail's share price on its first day of trading did not warrant an investigation.

A spokeswoman for the Department for Business, Innovation and Skills said the majority of the 16 core investors were still shareholders in Royal Mail.

"There was no agreement - gentleman's or otherwise - on the holding of Royal Mail shares by priority investors.

"As is standard practice for any flotation, we did not seek to lock any investors in as they would have paid less for a stock they could not trade."

Vince Cable, the Business Secretary, told MPs that he would not apologise for the pricing of Royal Mail's shares and repeated his assertion that the sell-off had been a success for taxpayers.

Royal Mail declined to comment on its prospective bond issue.

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Twitter Rant Executive Checks Out Of PayPal

A newly appointed senior executive at PayPal has left the company after a late-night Twitter rant at his colleagues.

In a poorly spelled outburst on the social networking site, Rakesh Agrawal turned his fire on Christina Smedley, the company's communications chief.

He wrote: "Duck you Smedley you useless middle. Manager. Christina Smedley is a useless. Piece of s***."

He then said: "People who should be fire from paypal Don Christmas a pool a kick."

Mr Agrawal later said the comments were posted by mistake

There is understood to be no employee at PayPal called Don Christmas.

Mr Agrawal – recently hired as director of strategy - later said the comments were not meant to be posted publicly, and were instead intended for a friend.

He later wrote: "I was using a new phone that I bought because I wanted to test experiences on android.

"Those messages were meant for a colleague."

He added: "Note to self: don't test a new phone when sleep deprived after working your ass off for 20 hours a day while on vacation."

The tweets were later deleted.

PayPal later tweeted: "Rakesh Agrawal is no longer with the company.

"Treat everyone with respect. No excuses. PayPal has zero tolerance."

Mr Agrawal hit back, saying he had resigned before posting his offensive tweets.

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Animal Testing Campaign Causing Industry Crisis

By Joe Tidy, Sky News Reporter

An international campaign to get airlines to stop transporting monkeys for drugs testing is causing a crisis in the research industry.

Every year more than 2,000 monkeys are flown to Britain to be tested on in over 3,000 procedures for illnesses like Parkinson's and dementia.

High-profile protests backed by celebrities including Chris Packham and Carol Royle have led to only one airline - Air France - willing to fly the animals from breeding farms including those in Mauritius.

The European Animal Research Association says the action has led to "a monopoly" and already pushed the price of research up.

Actress Carol Royle has joined the celebrity-backed campaign

Kirk Leech, from the organisation, says it is a "national embarrassment" that no British airlines are willing to fly the animals and says pressure on Air France is of great concern.

"The pharmaceutical industry is a sensitive one and if you can't get animals into Europe for research then those studies will move to other parts of the world," he said.

"There will be a flight of industry to the east and that will not benefit the European economy or the UK economy, and it certainly won't benefit UK university and other researchers that do this kind of work. An artificial ban on the importation of primates will do nobody any good."

Testing on primates is highly controversial

Testing on primates is a very small part of the animal research carried out in Britain  - less than 1% of the four million procedures involve monkeys - but it is extremely controversial.

Undercover filming at a monkey breeding farm in Mauritius has formed a major part of campaigns to convince airlines to stop transporting the animals.

The National Anti-Vivisection Society filmed monkeys being swung by their tails and tattooed in what they describe as "brutality".

Fleur Dawes, from the charity, said: "We would like to see Air France stop transporting primates altogether. It's completely unnecessary when we have advanced scientific techniques that can provide much better human data."

Researchers argue that biomedical alternatives are not as accurate or effective as primates.

Air France has defended its position

Air France said in a statement: "The transport of live animals is an activity assigned to Air France Cargo. With its wide experience in this field, the company holds an authorisation to transport animals issued by the Ministry of Agriculture certifying that Air France complies with current regulations.

"Meanwhile the company has established strict standards in terms of comfort and well-being to ensure animals optimal conditions of transport.

"Primates travel to private research laboratories as well as public research laboratories. This highly supervised activity is paramount in the development of research and medicine in France and Europe. As such, Air France management has received numerous letters of support from various public or private research institutes."

Today, drugs companies and scientists are meeting at the 2014 Animal Transportation Association Conference to discuss the issue - which is already having major implications on their work.

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