pha frenzy. astrazeneca sayersrma -- shares soar as pfizer says it is still interested in a deal. >> ge arrives in paris to defend their offer for alstom. a tougher line. the west is getting set to impose new penalties on putin's inner circle. good morning, everybody. you are watching "the pulse." we are live from bloomberg's european headquarters in london.

>> we are just getting some breaking news from president obama. he is giving a news conference in manila right now. let's listen in. he is talking about sanctions in russia. >> relief operations, i will give you a perfect example. sprey aircraft, a significant upgrade in capabilities in caves -- in terms of reaching out to remote areas. about thealking missing malaysia and aircraft, the president listening to what is being said in manila. he has been talking about the situation vis-à-vis russia. pfizer has confirmed a possible offer for astrazeneca. with more on that story, manus cranny and sam from bloomberg industries. let's start with you, sam. what do we know at this point and what don't we know? >> we know that pfizer made an

approach in january. on the 16th of april, they came back again. as you and i were talking last week after the novartis -glaxosmithkline deal, that might have tweaked their interest again. there are many other regions where pfizer would be interested in an astrazeneca. that is what we know so far. we know what price they suggested in january. 46.61 pence. the rest is open to speculation going forward until may 26, when they have to make a formal decision. >> the reason it is going to happen in this way is that an offer was made. now we have to deal with takeover law, which makes things more complicated. >> it does. in some ways, it is quite a good thing. it means that our pay levels in terms of -- i do not know whether the 26th of may is put up or shut up, but it does take

us through a little bit more clarity. at the front door, knocking at the front door of astra. shareholders have to make a decision whether they are interested in that type of proposition or they wait for the tight line of astra to come through and deliver. that is the debate. also, valuation. you were reading the headlines saying the deal for shareholders should be at 65. >> this is my point about the competition. is that they cannot bid in excess of the original offer for six months. is that correct? >> they were saying around 60. >> in terms of why astra should bite, why would he be interested in coming back?

>> i do not know if it will be down to the management at astra. they have the duty to shareholders to put any meaningful offer for the company to shareholders. last week, we heard some rumors that they appointed two banks to come up with a defense as to why you would want, as a shareholder, to take the number that is being offered to you in cash today. do not forget, it is not all cash. cash and shares. you still have some risk if things do not work out. 2017, whenl 2016, you begin to have more things in the pipeline giving you earnings growth. >> that it is a bit -- it is a bit of a leap of faith if you want to continue to hold the stock. analysis suggested something like $30 billion in

cash. >> we had a conversation with ari from spero this morning. he said that 20% of pfizer's pipeline drops off. they are one of the most challenged companies in terms of patent portfolios. you have a very keen buyer, but perhaps not such a keen seller in this trade. >> deals like this, they do not always work. if you are looking at this from the pfizer point of view, how big a risk is how management taking here? >> there are many elements. we have to think about how do we -- how they can make this work from a financial perspective. some of the drugs that have been discovered -- remember, pfizer has been active in the u.k. until just last year. they shut that down. they have big you some of their overseas cash because there is

and the cash there pipeline in oncology that is beginning to come through with astrazeneca, there are a lot of elements. >> i think another couple of issues will come up. bury was sold to kraft in the u.s. edwards raised a couple of important points, which are, with the government have an interest to get involved and ?ay, look, this is a threat they can interfere in strategic assets like water and defense, but this is drugs. >> did they not comment on that? i saw somewhere that someone from the government said this is a commercial issue, not a government affair. >> thousands of jobs could be at

risk here. this is an area the government would like to see at heart. triangle becoming a little firmer. >> maybe they will ask for a commitment from any bidder, any of these companies. >> that has got to be rattled in the papers. not just in the broadsheets, the -- excuseut and ab me, the tablets, but on the broadsheets as well. >> it is an interesting compare and contrast. thank you very much indeed. francine, that's talk about the french connection this morning. >> should you be more french, probably not. alstom stand at the center of a bidding war. support fromon officials for its asset swap land. in the meantime, ge's boss will

make their offer to president hollande. hans nichols is in berlin. here with us in london is matt campbell, who broke the original story. siemens is keen to get in on this. what is the case for getting into the assets for alstom? clear about this. this is a defensive play. their play honest is to prevent ge from getting a foothold in the european market, a stronger foothold, i should say. ge clearly wants to make their case that this has synergy and it will be able to keep a lot of jobs. there will be fewer job losses. if you combine siemens and alstom, you could have a situation where there is some overlap. that means layoffs in one of the assurances that siemens is giving is that there would be no job losses for three years. that is an indication that there could be job losses down the line.

the french resident, we will see how strongly and how much authority they have to pick winners and losers and who the ultimate acquirer will be. >> can the french government really get that involved or they could say they do not want that transaction to go ahead, it has to stop now? >> this is the most interesting question at the heart of this. how much influence does the french government actually have here? they are not a shareholder in alstom in any affect. we also saw vivendi trying to sell sfr. the government endorsed a bid from buoygues. vivendi said no and went with a bid that the government did not like. the government has the bully pulpit and has the attention of the media. they can clearly make their views known. at the end of the day, it is tough for them to force companies to do what they want. there is one big asterisk, which is alstom, selling power

equipment and trained, depends on things like the french national railway and the french national utility. it is not like you can just take the go -- just tell the government to take a walk, but the government's role will be limited in deciding what happens. >> and they can always do a degree, can they not? decree, can they not? this is something that is strategic so we do not want a foreign takeover of it. >> in 2005, it looked like pepsi was lining up a bid for danone. they declared it to be off-limits to foreign inquirers. pretty extreme step, especially since, given this recent cabinet shuffle, francois talking abouteen

being more friendly to business and reviving the economy. but clearly the government wants to weigh in strongly on this. >> we talked about it last week. ge is very well-like in france. i guess siemens has the upper hand because it is seen as a european. they would be trying to create some sort of eads for the industry world. >> it is an asset swap. the trade would be made in france and -- trains would be made in france and the energy corps would be more german. a lot of u.s. companies, including ge, have piles of cash abroad. there is all this talk about how frothy the m&a market is right now. one of the reasons is these companies have stockpiles of cash sitting abroad. they do not want to repatriate because they could face 35% tax rates. that is one of the factors motivating them. ge wants to make a bigger play

in the energy sector. take care of all these plants, build path -- build plants, service them, that is their future. >> thank you so much. that ge already employs 11,000 people in france. back to you. >> the president, from the philippines, he has been talking about the escalating crisis in ukraine. he is talking about the fact that further sanctions will be announced later today. thes fill in the gaps and details. ryan chilcote joins us. >> he said that these sanctions are going to be targeted and they would affect, among others, the high-tech defense sector. to put things in context, we heard from president medvedev last week, saying that russia sold just under $16 million worth of arms last year. -- $16 billion worth of arms last year. the way they will chip away at that is possibly sanction a

,ussian company, either rostech a big holding company, or an export company, the specific on many to take control of exports. in any case, president obama is hand,ing the u.s.'s saying these sanctions are coming later today. if it has worked like it has in the past, it would not be just individuals, but companies that would be sanctioned later today. on the list, potentially? >> one of the names we have learned from treasury officials could be on the sanction list, the ceo of rosneft. bp has 20% in rosneft. it happens to be the worlds's

largest publicly-traded oil producer. beginpens to exploratorium work today with exxon. is sanctioned, it makes things awkward from a public relations perspective for bp. >> we will leave it there. you will be back. ryan will be covering this all morning. he will keep you up to speed. we will also be live a little bit later. she would give her take with what has been happening with the observers, the latest news on the sanctions, what it means in terms of the investor story. all of that is coming up on "the pulse." see you in a couple of minutes. ♪

>> you are listening to president obama. he is speaking in the philippines. he has been taking questions on a range of subjects, including critically,and, what is happening vis-à-vis russia. new sanctions will be announced later today. >> wilmore sanctions deter putin or will the russian president continue just don't tensions in the ukraine? on thegreat to have you program again. we understand that these are phase two sanctions.

target individuals and not sector-wide or industry-wide. how hard will they hurt the economy? >> right now, the level two sanctions have not motivated a change in russian policy towards ukraine. they are also unlikely to motivate change of policy in the short-term. impact of these individual investor erodes confidence and create certain problems for certain companies which can translate through the economy to a more white red problem in the sector. widespread problem in the sector. immediate effect would be growth on sanctions. targetaid he will not the financial sector on a broad basis.

nevertheless, he is talking about the defense sector, the high-tech sector this morning. there may be certain individuals, like the ceo of rosner. -- rosneft. through theur way spectrum of sanctions, where do you think we are in the process? what kind of effect are they expecting these sanctions to have? >> the maneuvering space for these sanctions is very broad. if you expand these sanctions, they can get through to the large openings within the russian economy. they can target large banks. really, the spectrum of how these sanctions can be structured is broad. it can really come to the point that these individual sanctions create an environment which is a to broad-based sanctions. >> people say you like to keep your powder dry. so far, we have not heard a result from vladimir putin.

>> if the situation is in sort of a stalemate like we have in eastern ukraine and it continues for long enough, we will see these sanctions fighting a little bit harder. we are starting to see russian companies are having a problem raising money on the international market. tog-term, this is going eventually turn down the russian policy. >> are they being too scared because they are scared about their own prospects or is it them keeping powder dry? >> it is a bit of both. the part of the europeans, it is the concern of getting hit by the same sanctions that you impose. it challenges your investment and trade links. on the part of the u.s., at the moment, the level three sanctions, the broad economic eventually beld

filed in case of an invasion. it is different on the part of the eu and the u.s. >> if you go to washington, people are talking about containment, the long telegram, 1950's u.s. policy toward the soviet union. can we think about these sanctions in the same sort of broad parameters as containment? >> not really. a situation is very different. it obviously brings up the parallels of the cold where -- the cold war and containment and the domino effect and all of these things that we had during the cold war. right now, this is more basisnging the economic of what russia has been doing over the past decade, using foreign financing. it is not laying down the boundaries on the ground, where you put troops on one side and troops on the other. >> how much of a headache will it be -- for example, we

understand that the ceo of rosneft might be on the list. how much of a headache is it to understand who you do business with? source will be a major of business for regions in the next couple of months, i am sure. it is a problem for large international financials that financed these sort of deals. it is very difficult to figure out who owns what and how deep you can get into a particular deal and also figuring out, if the situation gets worse, if somebody who has a stake in the same venture -- is somebody who has a stake in the same venture going to get hit? it is going to be very difficult for international financials to figure it out. >> very cautious this time around. >> thank you so much for joining us today. >> still to come, angela's apple. outgoing ceo leaves the heritage brand behind to

take up her new role at the tech giant. see you in a moment. ♪

>> welcome back. let's give you a quick markets markett -- eight quick check. 50% on this time last year. buoygues, andm,

now it is the real turn of the big beasts of pharmaceuticals. it is straightforward. once you take out that her hundred $28 billion worth of $328 billion, -- do you believe that it will come through? look at this, astrazeneca. the biggest day move. volume is trading heavily. more or less1, where we believe a deal may be offered or lower and that is the critical issue. back to you. >> still to come, new gm's and new muscle car. the special automobile. >> and you ought to follow us on twitter. it would be great to have you along with -- along for the ride. we will take a short break and see you in a couple of minutes. ♪

. .

>> welcome back to "the pulse" live from bloomberg's european headquarters in london. i am francine lacqua. >> i am guy johnson. president obama says new sanctions will be announced later today. he made those comments in the philippines. he arrived there this morning. phil mattingly is traveling with the president. he joins us now on the phone. what did the president say? what european and u.s. officials have been telegraphing for the last couple of days, the president went ahead and confirm. he said that new sanctions will

be imposed. they will be targeted sanctions. they are going after individuals and companies identified by u.s. officials as having close connections to russian president vladimir putin. another thing he added, the sanctions will specifically target high-tech defense exports. the president said that he did not believe these are the type of things that are appropriate to be exporting in "this kind of climate." expanding the sanctions they have imposed earlier and they will have a specific target on high-tech defense exports. >> what are we expecting? i know it is difficult to say but what are we expecting in terms of sanctions? releasing aeasury list of targeted individuals? >> we will see something similar to what we saw in the first round. the treasury department will take the lead on the u.s. side. around, thee

europeans worked closely with the u.s. as they have been throughout the week leading up to this current process. you will see them pretty unified in the procedure. you will see differing targets. it happened the last time, it will happen again this time. the lists are not going to be identical for the eu and u.s. will be interesting to watch as we come closer to markets opening in the u.s. usually that is around the time people are looking when it comes to sanctions being announced. you will see it. there is multiple agencies involved in this process. treasury will take the lead from the u.s. side. we should have something coming out in the next couple hours if it is anything like last time. indeed, you very much bringing us up to speed, phil mattingly. >> let's turn to our corporate stories. pfizer confirms that it is interested in acquiring

astrazeneca for nearly $100 billion. the deal would one of the biggest in the company's history. is -- bayer exploring a sale of its plastics unit. we are joined by david tweed in berlin. bayer reported first-quarter earnings this morning. >> they did do pretty well. the share price is up about re-.7%. just to put that into context, that gives bayer a market cap of 82 billion euros. that is $114 billion. when we talk pharma and chemicals, everything is such big numbers. as for the m&a, interesting story going on at the moment. it looks as though the chief bayer is at last in

talks to sell the plastics unit, worth around $10 billion. there has been quite a lot of speculation that he would get around to sending this unit. this unit doesn't actually make its cost of capital and won't do so probably until about 2016. a lot of strategists had been expecting him to put it on the block. the interesting thing is, it has taken a rather long time. this guy has got a reputation of being a bit of a player in mergers and acquisitions. that is what it looks like at the moment. not quite sure who the potential buyers are. a chemicals company, the second-biggest in europe, potentially one of the buyers. the people who have been involved in the discussions say at the moment it doesn't look like they will be the buyer. up the fact that

dekkers is a guy that likes to see a little bit of deal flow. let's talk about merck and a possible acquisition there. >> the reason why he would want to get rid of this business, the plastic business, is because it is an underperformer. like many pharmaceuticals chief executives, he wants to focus on the businesses which are doing the best. for bayer, that means consumer business. it is understood according to people familiar with those talks that bayer is one of these companies in talks to buy the consumer over-the-counter drugs unit of mark. -- of merck. i am talking about coppertone suntan cream. it would go very well with the portfolio that bayer has. according to people who are familiar with the discussions, it looks like the potential bidders also include santa fe --

sanofi. there would be fewer antitrust concerns. they will probably make it fit better in terms of cost cutting. >> david, thank you very much indeed. our europe editor, david tweed. >> from pharma to football, european football's governing body is preparing the biggest clubs for breaking new finance rules. >> let's find out what is going on. jonathan ferro is here with more. >> 45 million euros, the magic number. that is the maximum amount of losses required over two seasons. we will talk about chelsea and monaco. the two names i am going to bring up our manchester and juventus. they have racked up losses of 100 74 million pounds. -- 174 million pounds.

you face slightly less. that number on the screen isn't correct. 64.6 million euros for the likes of juventus. these guys technically are in breach. it is going to be difficult to know what the consequences will be. >> i was going to ask about the consequences. >> they got evicted from the champions league. it is a big money tournament for them. if they get evicted, that is going to hurt these guys. that is why they took it so seriously. if you are expecting blood, you are likely to be does appointed. no one is going to get expelled from the champions league. the rules are so difficult to read because there are so many loopholes. progressively got smaller, that would be viewed favorably.

a lot of people look at that and question the spirit of financial fair play. what are these fines going to be like? they can appeal. >> will it stop them spending so much money and paying these players? >> to some extent, people are concerned. what it means is where the money will be spent and where it won't be spent. what we might not see are the likes of roman abramowitz coming to buy midsized clubs and spending hundreds of millions of euros and pounds. they won't be able to do it anymore. we will continue to see these , theywith big revenue will carry on spending because they can. in a way, the consequence of all these roles is that dominance. prettythan ferro with

incredible figures. >> let's move from football to fashion. see what we are doing here? pharma, football, fashion. angela ahrendts leaves to apple this week highlighting the focus of the tech giant on improving its retail performance. let's find out what is going on. even thoughe, earnings impressed investors last week, angela ahrendts is getting a tough gig here. >> she could well be. the euphoria of more money being given back to shareholders, a 17% increase in iphone sales, but scratch the need for service. there are some weaknesses when it comes to the retail aspect of apple. retail sales were flat for the last quarter. they are getting less bang for their buck from these gorgeous stores that they have that were really steve jobs' incarnation. we are seeing 2013 retail profits down 13%.

even though they opened 26 more stores. what is going on here? it seems to just be the key issue that is confronting apple in general. the fact that you are getting cheaper competitors and copycats. now they have got asian rivals copycatting to a certain degree. hic isn't only being done by apple anymore. the genius is being copied as well. they need to do something new to get us buying in the stores. >> what will be her key focus? need tos ahrendts achieve? experience, about online and in the store as well. she can't control the product range. where will be launched sometime this year.

it is all about getting the youth involved, bringing back the style to apple. what did she do so well at burberry? she innovated. she brought social media to burberry far quicker than lvmh and kering, her competitors. she did clever things with lipstick. you could kiss your phone and send it with a certain shade of burberry lipstick to a friend. that is getting the young aspirational buyer interested. they may not be able to afford burberry coats but they can afford lipstick. bring that luxury aspect back to apple. quickly, we have info on apple later this week. there could be a rather large bond sale happening. back to going investors. that worth remembering bond investors have lost money

if they bought apple's original bonds last year. particularly if they held the longer-term debt. apple is going to have to pay back investors. >> thank you so much. caroline hyde with the latest on angela ahrendts and burberry. >> what are they up to that they need her early? we will talk about that later. coming up, it is ge versus siemens. we will examine the politics behind the battle. we are going to go to paris with the president of the french employers union talking to us from our bureau there. ♪

>> welcome back. you are watching "the pulse." we are live from bloomberg's london headquarters. a major roadblock between jeff immelt and his plans to acquire alstom. siemens has offered alstom an asset swap deal. >> for more on how this may play out, we are joined by the honorary president of the french employers union. he joins us from paris. thank you so much for joining us. francois sense -- hollande is meeting three people today. management for siemens, jeff immelt, and also some members of the bouygues family. immelt versus francois

hollande going to be a clash of cultures? understand that of frencha big symbol industry. at least for political reasons. normal that the french government pays much attention to this deal. i would say also something which is quite important, french government is the major client of alstom. just as regular business, it is important when there is a potential merger, to listen to the clients. for all these reasons, even if i don't like when the french

government intervenes in business deals, we can understand today why the french the managers of the potential merger companies. , the frenchparisot government has made it clear that france is open for business. what message will be sent to the world if france decides to push for a siemens transaction here rather than ge? >> it is a very good question. actually, we have many problems. ofst, we have a tradition state intervention. problem,ave a specific which is that the minister of much toomy likes very

say very loudly and very publicly what he thinks is the best for french industry. is not from the far left, but he is from the left of the left. take this, you have to ministerthat the prime is a real social democrat. have as that we have to very open economy. that we must stay very attractive. i don't think that we will hear declarations, for ago, when theyrs said that we should nationalize.

i think this kind of declaration are absolutely finished, over. maybee to consider that recovery is looming. still quite be attractive. i don't think that the government will put some public declarations against any kind of merger. we have also our european feelings. many french would rather like a merger between a french and a german company like siemens rather than a french and american company. timeu spent much of your fighting this french nationalism to make sure that the world saw that france was open for business. with this, is it also up to alstom?

we were hearing from one of our reporters that they tried to block the sale of sfr by vivendi. if a company says no, this is business, this is none of your line thatis that the alstom needs to take now? do they need to be a little bit tougher. said, of course we can say that it is not the french government's business. the french government is not a shareholder of alstom. government is the client, the major client of alstom. regarding this specific role, we can understand that the government looks at that. think thatr hand, i this socialist government , whattands a little more is an open economy, what is

free-market economy. think that ifn't the deal is well settled, i don't think that the government will try to block the deal. a regularso that on basis, it can't block the deal. just want to show to the french public opinion that it pays attention to the deal. end,eling is that at the ge will win video. there are so many overlaps between siemens and alstom. in terms of business, it would be much more complementary to make something with ge rather than siemens. >> just a final quick question. say thatart of ge to

it wouldn't by the trains business? such an important symbol for the french people? >> yes. it might be considered very smart. but maybe the most important thing in this is what will business the nuclear inside of the energy business. this is also very important, very symbolic. they will buy at the occasion of this merger something related to the nuclear business. nuclear is very important in this deal. >> thank you so much for your time today. laurence parisot, honorary president of the french

employers union. we are back in just a couple of minutes. ♪

>> for those listening on bloomberg radio, the first word

is up next area for our viewers, a second hour of "the pulse" is coming up. >> we are talking about drug deals. pfizer buying astrazeneca. we are talking to an analyst about what exactly happens next here. is this a good deal that pfizer is proposing? we are going to talk about that. >> we are also going to be talking about the bidding war for alstom. thatrench government said it doesn't have a stake but it is the ultimate client of alstom. we are speaking to laurence parisot. she was saying, watch out for the french developments. francois hollande, the president is meeting with siemens management, bouygues management ge's jeff immelt. >> this is what, the moleskin? >> the moleskin of the tech savvy. onmicrosoft is putting word ipads, etc.

what does that mean for business? we are going to find out. it is going to be a great conversation. ♪

>> pharma frenzy. astrazeneca shares soar. pfizer says it is still interested in a deal. >> the french connection. jeff immelt arrives in paris to defend his offer for alstom. siemens proposes a european solution. >> president obama says new sanctions against russia will be unveiled today and will target sectors including high-tech defense. good morning to our viewers in europe. good evening to those in asia. a welcome to