Pfizer is preparing to put AstraZeneca in a "bear hug" by stating it will not increase its 63 billion pounds offer without getting a closer look at the UK company's drug prospects, the Sunday Times reported. The US giant will lobby Astra's shareholders to force it to enter talks and will also talk about alleged weaknesses in its target's drug development programme. Senior banking sources told the paper Astra's board would hold out for a £55 a share - 10% more than the current offer - before entering talks.
Barclays will put its businesses in Spain, France, Italy and Portugal up for sale when it unveils its strategy review on May 8th, according to the Sunday Times. They will be put into a large "non-core" unit along with under-performing investment banking activities. The businesses are not in trouble but profit is too low. The strategy update will follow a trading statement on May 6th that is expected to reveal that fixed-income and currency revenues in investment banking fell 30% in the first quarter.
Barclays' head of mergers and acquisitions is set to leave the bank, adding to the number of top bankers to leave before a strategic update on May 8th, the Financial Times said. Paul Parker, who joined Barclays when it bought Lehman Brothers' US business in 2008, is said to have been eased out by Barclays but his departure will add to concern about a wave of high-level departures. They include Skip McGee, who quit as head of Barclays America. Analysts fear other top US bankers will follow because they are at odds with group bosses over pay.
Mothercare has asked its lenders to relax banking covenants just seven months after the struggling mother and baby retailer agreed a £90m refinancing, the Sunday Times said. At the time of the previous deal with Barclays and HSBC, Mothercare said it had secured "the liquidity and covenant headroom" required for its strategy. A source close to Mothercare told the paper it had asked for breathing space so it could fund investment. Without the banks' support, Mothercare could come dangerously close to breaching their terms because of the cost of shutting loss-making shops.
The Bank of England is likely to intervene to cool the housing market as early as next month, the Sunday Times said. The Financial Conduct Authority changed its rules on May 2nd to require lenders to take into account recommendations from the Bank's Financial Policy Committee (FPC) when setting stress tests. The FPC can now make lenders impose tighter affordability tests on borrowers. It can force banks to hold more capital against mortgages, ask the Treasury to scale back its Help-to-Buy scheme or impose mortgage caps.
Tesco faces shareholder unrest at its annual meeting because of its poor performance and unclear strategy, according to the Sunday Times. Several big shareholders have approached Chairman Richard Broadbent recently to complain about Tesco's lack of progress. A top 10 shareholder told the paper his firm may vote against the re-election of Broadbent and Chief Executive Philip Clarke. The fund manager believes Broadbent is failing to keep Clarke in check.
Political pressure on the energy sector threatens to strip Centrica of its a A-grade credit rating for the first time, according to the Sunday Telegraph. Moody's has put the owner of British Gas under review for a downgrade in a move prompted mainly by "the increasingly difficult and uncertain operating environment for utility companies in the UK" and likely pressure on Centrica's profits as a result. Moody's has rated Centrica A3 since 2006 but the review could cut it to Baa1 within 60 to 90 days.
Index fund managers have criticised the UK government for leaving them off a list of investors given priority in the flotation of Royal Mail, the Financial Times said. Big tracker fund companies such as Legal & General, Scottish Widows and Vanguard were excluded from the 16 priority groups revealed by Business Secretary Vince Cable last week but hedge funds such as Third Point and Landsdowne Partners were included. Someone from one index provider told the paper his firm would hold the shares
for as long as Royal Mail was on the index instead of looking to "make a quick buck".
Hundreds of multinational companies are considering following Pfizer by relocating to the UK for tax purposes, the Sunday Telegraph reported. PwC and KPMG, the accountancy firms, each said they were talking to more than a hundred companies looking to increase their presence in Britain to take advantage of changes to how the country taxes companies. The wave of businesses coming to Britain could provide more jobs and tax revenues and help improve the balance of the UK economy towards the manufacturing industry.
A change to stock market rules could throw a spanner into the works of the takeover of Essar Energy by its founding Ruia brothers, the Sunday Times said. The Financial Conduct Authority last week increased the threshold for shareholder approval for a bid by a controlling shareholder to 80% from 75%. If the rule change applies to Essar, the Ruias will need to gain support from about 15% of minority shareholders but without the change they will have little power to block the unpopular deal. The FCA has not clarified if the rule change will apply to Essar.
BT will report the first rise in annual revenue at its consumer arm for more than a decade after the telecoms company paid £2bn for pay-TV sports rights, the Sunday Times said. Forecasts suggest BT will report on May 8th that income at the consumer business rose to £7.6bn in the year to the end of March from £7.4bn a year earlier. The group is expected to increase its dividend to 10.75p a share from 9.5p.
Morrisons is expected to announce an unprecedented fall in sales and Sainsbury's will warn of slower growth ahead when the supermarket groups explain how they will take on the growing power of European value chains, the Sunday Telegraph said. Analysts expect Morrisons to say on May 8th that sales at stores open a year or more fell 7% in the last three months. Sainsbury's reports annual profits the day before.