astra zeneca shares takeover bid is too low. buying directv for $50 billion. qatartsche bank enlists in a m. -- capital hike. morning to our viewers. morning to all of our

viewers. is "the pulse." >> welcome back. your first hour? >> it was terrific. arsenal won. we take you inside the lab where starbucks' taste team makes the perfect brew. >> nutella, olivia likes it on her crepe. with a little bit of banana sprinkled on. we will see how some brands managed to test the time -- stand the test of time. astra zeneca says the bid is not enough. to 60 raises the bid

billion pounds before being turned down once again. game over or not? >> i've talked to one of my andnds on the sell side they have talk to the company directly and it sounds like they do not want to carry on business. it is not just about the price. there talking about social responsibility. that resonates very well with the political climate and the way this has been handled in the public domain. i think it is done for now. i don't know how many more degrees of freedom pfizer has in terms of its movements, at least for the next three to six months. >> what are pfizer's options here? there are no other big pharma companies for them to buy. >> i don't know whether you would call it hostile if they try to reach out to shareholders.

i don't know if that qualifies as hostile. there is still four trading days left -- are still four trading days left. they could sit around the table and figure out -- of -- they have kind of sat around the imaginary table. >> the two-hour long conference call yesterday afternoon. >> if you take that into account, there has been a lot of discussion going on. they never got down to looking at the numbers literally. assuming that everybody tells the full truth. >> pfizer possibility to carry pfizer's deal -- ability to carry off a big deal -- is that damaged for the future? >> i don't think so. these things are always looked at on the run merits. this deal got pushed back because pfizer came with numbers

that were perhaps initially not as high as one could have calculated, using fair valuation metrics. --re is not one single you newspaper in the u.k. that did not write about it and then the politicians. >> there was so much criticism in the u.s. about the fact that the u.s. corporate tax policy was so uncompetitive that this was the latest example of a diversion. i think they were not happy -- happy not to lose a $100 billion deal. than planning to spend more $48 billion to snap up directv in the u.s.. tois this really just a deal compete with the time warner cable comcast merger? >> it is about competition and content. content is king. we don't just watched television on our television. we stream it.

this is why at&t really wants to ramp up its arsenal of content and provide more video, more television. at&t already has presence. they already offer the video service, you first -- u-vesre. -- u-verse. they will be adding 38 million viewers. they want an entire quadruple play. they want phone, wireless, internet, and also tv video streaming services. this is perhaps why at&t is willing to pay $48.5 billion. that would make it the third biggest deal of the year. what is in it for directv? they have had a lot of competition. comcast, time warner, and many of us are not going to satellite providers for content. we're going to netflix, online, amazon fire tv. they have been under fire -- pressure, looking to boost

itself in terms of the money that it is putting in its coffers. at&t is the key suitor for them right now. >> there has also been talk about if the at&t, sprint merger does not go through, could dish come in with a bit? -- bid? a lot of changes in the telecom industry in the u.s. are alsoy concerns high on the agenda. >> you are right. the chief executive of at&t, randall stephenson, has said that he is offering unprecedented concessions to get this deal through. what are those? he says, we will sell our holding in america mobile. there would be too much overlap in latin america. directv has a lot of presence in london america. so does america mobile -- presence in latin america. so does america mobile.

at&t says they will sell off america mobile shares. they are worried that the regulators will give this the thumbs down. it is why the at&t deal as it stands would have no breakup fee for directv if it does not get through. they are not on the edge of having to pay up front on anything. there are worries that a why role -- rival could swoop in. such as dish network. so far, dish says it is too expensive. >> that is true. their chairman says the valuation looks a little bit frothy. perhaps it is time for alliance. >> it is, day monday for us. &a monday for us.

there was talk that it has the option to up that to 100% -- it could buy the rest of the 55% it does not already own in february. could that be sped up? but that come sooner than the eight months in the timetable? there are a lot of hedge funds taking take -- stake in alliance , hoping that it could be streamlined by walgreens. they are trying to use cash abroad. this could be exactly what walgreens wants as well. become headquartered elsewhere in the u.k. or switzerland because of tax purposes. a privately held company. no share price to show you. windfallould be a big for the chairman of alliance. thank you. >> a big different banks. credit suisse to plead guilty as

early as today and pay $2.5 billion to resolve accusations that it helped americans evade taxes. john is here with the details. >> i think a lot of people expected deal to be done today. you have two aspects of this story. one you can feel, touch, account for. $2.5 billion. we can price that in. >> the guilty plea, how do you price that in? >> exactly. that is a massive unknown. olivia has been following this story in the u.s. regulators have been pushed hard to get the scalp. is the guilty plea more than symbolic? have reallyally hard consequences? what does it mean? and you havebank to do with credit suisse and you have just been guilty with a crime -- >> does it affect my ability to operate?

think that you need a criminal charge, which could potentially revoke the charter. >> the regulators have been trying to smooth those concerns. but it is not their decision to make. you are a bank and you have internal roles. that will drive what will happen. ofyd blankfein give an idea -- gave an idea of where things might head in terms of the banking side. the client side of this -- >> what about reputation? is brady dougan possibly on the way out? >> he is getting pressure on a lot of corners to move. he battered the questions away, as you would expect. when you sit down in the senate back in february and say this was a few small bunch of swiss bankers and then several months later you might have to plead guilty to something much wider, that is quite a significant

development. people will be asking, if the bank is going to plead guilty, what does it mean for a man who has been there since 1990 and did not know what was happening? >> coming up, deutsche bank. we will hear from the co-ceo coming up. ♪

>> let's check in on the

currency markets. we look at dollar yen today. strengthening to a two-month high. the dollar is a risk currency. we have the clashes and keep -- conflicts withna vietnam. the yield premium, the 10-year treasuries. seven month low. we have janet yellen speaking this week. we have analysts saying the labor department reports on may 22 will know the number of met -- americans applied for jobless benefits increased. it is a busy week. money moving into the haven currency. i royal family is buying in. it is all part of a deutsche bank plan. deutsche bank co-ceo anshu jain

spoke to hans nichols and frankfurt this morning about the plan. timing, i think what you are seeing in the european banking landscape is a shifting of the tectonic plates. it could be a once in a generational change in the state of competition. our business model is unique. if you think about a business model that spans everything from retail to transaction banking, agement,n headquartered here in frankfurt. a unique business model. it is the largest one of its type left standing. with the changes that we see, we decided to go one step ahead. we decided to pre-position ourselves with the capital buffer which would put us in a strong position. why 8econd question was, billion? there is no science to that. we think it gives us a healthy

buffer against any of the headwinds that could come from this point onward. in terms of the strategic investor, we are not part acting -- providing financing. there is a whole broad swath of regulatory changes that we have seen in the last 2-3 years. hopefully that will stabilize. we are not counting on it. convergence is one of many dynamics that could develop. i'm speaking very broadly about any number of challenges that could come. was the litigation cost last year. how much of this $8 billion will be dedicated toward litigation? how can you be certain that you will not have another round of capital increase? >> litigation continues to be a trial for the entire industry. we said at the beginning of the year that it would be another year of litigation challenges. we have conservative estimates

built into the plans. we think this capital increase puts us in a strong position to do with regulation, litigation, and any other challenges that come. >> it is providing for litigation, as well as regulation? >> notts pacific with. -- not specifically. >> will deutsche bank continue to do business with any banks that face criminal guilty pleas? >> that is a hypothetical question. very difficult to meet -- for me. brett -- wect expect credit suisse to plead guilty in the united states. will deutsche bank continue to do work with credit suisse if the pleads guilty? >> another hypothetical, very difficult for me to answer without context. >> thank you for your time. >> we are now joined by hans nichols in berlin. talk to me about this additional capital. is it going to cover legal costs are not? -- or not? >> he dodged that question.

in part because he cannot know, he cannot possibly know what the total bill is going to be for litigation costs. they are saying this is all part of a conservative estimate. even though they recognize and acknowledge that they cannot possibly have any certainty, either on the regulatory front or the litigation front, there is one part in his answer where he talked about you can never have certainty on regulation, he seems to be saying that with a certain amount of resignation. two other parts really stood out for me. one, there is no science behind this number. this is a figure they arrived at through some other mechanism. second, they will not help finance the state, the investment vehicle in qatar. ony will not finance that the run. we now need to find out who is financing that stake. >> what about the elephant in the room?

o'er the cloud that nothing in over deutsche bank when it comes theerminal charges -- or clout that is hanging over deutsche bank when it comes to criminal charges? >> whenever you try to pin down a banker or a politician, they always say that it's a hypothetical question. withwe tried to clarify the fact that credit suisse will enter into a criminal guilty plea in the united states, will that affect your ability to do business with them? he still said it depends on circumstances. that is true on so many of these big questions. there are so many questions that people here in europe have about what the criminal indictment or criminal guilty plea may eventually look like. lloyd blankfein last week talked about saying that they would not take a step to terminate their relationship with the bank. they would not take that likely. they would be deliberate about that. there are systemic concerns of counterparties stop trading with

the bank because it entered into a guilty plea. will there be additional guilty pleas? will adjust the credit suisse? that is expected. or will there be additional guilty pleas, either through exchange rates, currency manipulation, or what have you? what more can we expect? >> that is hans nichols. >> coming up on the new energy, carbon busting blocks. we take a look at the latest green building material. ♪

thate building blocks block out more carbon than they produce. it is made from waste wood and recycled material. they're 100% carbon negative. they are being used in the new bloomberg building here. joining us is the chairman. good morning. we have an experiment taking place as we speak. what is it? is thatwe are seeing the common concrete block is going to save the world.

we have created a concrete block that blocks up more carbon dioxide than is produced in its manufacture. the more we make, the more we use, the more carbon dioxide is locked up. we have some of this recycled material here. waste, weng domestic he used to disappear into the atmosphere -- not a good thing -- it is now captured -- used to go to a landfill and that would be bad -- that is being brought to our veryry, it is a very -- clever scientists have developed a way of turning that into an inner aggregate and we then put that into blocks. >> may i? >> please. don't eat any. >> yes. >> we have put some of the raw

material in here with a little water and carbon dioxide and given it a little shake. if you feel underneath, you will feel some warmth. >> it is very warm. >> oh yes. [laughter] is cement happening works within exothermic reaction, it creates its own heat and then it goes hard and holds over. that exothermic reaction is going on in the bottle, not fast enough at the moment. basically what it is doing is absorbing the co2 that i have put in there. >> these are the building blocks of the future, are there? >> i think they could be. >> what are the other potential applications? >> before i answer that, can i just say that the other things that goes into the blocks is wood shavings. we have made those for 67 years, not realizing that wood shavings also lock up co2. >> your grandfather stumbled on

this by luck? >> absolutely. you have been doing your studies. >> these blocks are being used in all sorts of very well known construction sites. tell us about a few of them. , for layers hold the chard up. new bloomberg headquarters out ofg to be built these. the combination of the wood and material makes -- >> business is booming? >> it has been fantastic since may of last year. >> we will come back and tell us more about it. aboutyou for telling us your experiment. >> still to come, a bloomberg

exclusive. we bring you more from our conversation with prince andrew. we will be back in two minutes. ♪

welcome back. this is "the pulse." these are the bloomberg top headlines. markof england governor carney says surging home prices are the number one risk to the economy. prices rose to a eckerd high in may -- record high in may. >> the duke of york has been talking to bloomberg. he said the u.k. can only remain prosperous if the country is

ahead of the game in the changing economy. >> we are going to need nearly and one million digitally skilled people in the ,ext 5-6 years, perhaps longer in order to be able to go in and fill the jobs in the digital economy. bankrture bank -- deutsche has a new major shareholder, the qatari royal family. it is part of a plan to raise $8 billion ahead of the stress test later this summer. the co-ceo spoke to hans nichols. decided that we would get one step ahead and pre-position ourselves with a capital buffer, which would put us in a very strong position. why $8cond question was,

billion? a ratio of $9.5 billion. we think this gives us a very healthy buffer against any of the headwinds. >> let's get more on deutsche bank. good morning, thank you for joining us. >> good morning. >> otooto, let's start with deutsche bank. do you think this is it? are we done and dusted? >> deutsche bank has a history of coming back for more. --anshu it is certainly jain said it puts them at the higher end of their peer group. it addresses the capital issues that the market had identified for the bank. medium to long term, i would say

there remain a few issues. leverage issue is one really pressing constraint for deutsche bank. that is still at the low end. 2.5%. that oncely, i think the whole basil three implementation is done and could talkbal banks about 15% on a common and woodie tier one ratio -- equity tier one ratio. whether they will accrue that organically or through another capital cruise remains to be seen. >> how dark is the shadow of this litigation? it is still hanging over deutsche bank. how problematic is that if you're a bond or equity investor? it is an ongoing drain, i

would say. so far, all banks have really been able to handle the fines that have been thrown at them. it certainly remains a headwind. deutsche bank, with the thisncements today, that gives them additional buffers, would make you really worry that the cost might be higher in the end than what they are prepared for so far. >> i want to switch you over to credit suisse. what would be the consequences for a guilty plea -- of a guilty plea? credit suisse, as far as i can tell, one of the big issues is that a number of u.s. clients will probably no longer, or at least temporarily, will not be able to conduct business with credit suisse. from what i have read so far and

seen, this will not be there major bank counterpart. -- counterparties. something like pension funds in various other investors who will be restricted from doing business. this, apart from the fine, is that their franchise will temporarily suffer in the u.s. in particular, from this settlement. probable that there will also be management changes at credit suisse. certainly, they are strongly rumored in the press. as a criminalplea organization, if you like, in the u.s., you would sort of expect that to come. of course, with new top management, then you have uncertainties over the future direction of the bank, etc.

those are the two main issues at the moment. >> great to chat to you as ever. we will speak to you soon. >> very good. just 25 minutes, it is "surveillance." tom keene joins us from new york with a preview. tom, of course, before you even ask him i want to let you know that i have not yet seen baby george. i am keeping a lookout. i will send a picture to you personally. >> i saw that we have the duke of york on with that wonderful exclusive. i expect you do have baby george on at the earliest convenience. >> you are the official bloomberg world correspondent -- royal correspondent. you are also watching credit suisse. what is on today? >> it is a deal frenzy. we will talk about the exit of brady dougan that is speculated at this time. there is no hard information. we will talk about brady dougan, we will talk about credit suisse.

then we will go over to the deutsche bank deal. i ask everybody to stay tuned. we will look at hans nichols' conversation. then we go to pfizer and astrazeneca. the language over the weekend was incredible. there is a deal frenzy. we will speak about this. william cowan will join us with his perspective on executive banks. looking forward to speaking to him. >> a lot of our guests telling us that this is not the end for pfizer. you are looking at news for at&t. >> we will look at the telephone , directv deal. all eyes are on washington. we will go to peter cook in washington about the real question. will washington allow these mega media transactions to actually happen? >> interesting. we have got to get "surveillance" over to london.

all of the news is here now. >> that is absolutely true. >> thanks so much. >> let's check capital markets. jonathan ferro is here. >> three hours into trading here in europe. itlet m and a monday -- call m&a monday. risk off. look at the bond markets. percent.hree is that economic reality? i will let you decide. euro-dollar. up another 10th of one percent. will the ecb act? 90% of economists think they will. what shape will that action take? that is the debate we will have up until june 5. that is likely to drive euro-dollar one way or the other. >> coming up, five decades and counting. 's suitedig into nutella

success story. -- sweet success story. ♪

>> half a century ago today, and the tiny italian town, the first batch of nutella was made. , chocolate nutty

history. thanks so much for joining us. thank you for bringing us these the listeners -- the luscious products. nutella is a very interesting story. is considered a bit of a luxury. it is much more expensive than something like a hershey's brand. how do you keep the marketing strategy fresh when the market position has changed? >> i think you have to look at it as a luxury brand that has a unique story and unique heritage. it has come from 50 years of heritage. it is built through word-of-mouth and they shared love. -- a shared love. they have lots to build on going forward.

>> do you look down as a master chocolate here? is there a sense of -- chocolat ier? is there a sense of awe and it? >> i did not grow up on fine chocolate. with a luxurya item growing up. even now, the gold seal, the smell, it is nostalgic. it makes me still feel like it is a special thing. that takes years to install into the heritage of the brand. >> it is so interesting to me. when it got its start a half-century ago, chocolate was too expensive. nowadays, everyone is focused on healthy eating and there was a lot of sugar bashing going on in particular. alllla has managed to avoid of that. it is not seen as junk food. >> would you have to realize --

thatyou have to realize is the run out two generations of people who were brought up on nutella. -- are now two generations of people who were brought up on nutella. the same is true with iconic crisp brands and iconic soft drink brands. and simmers manage that themselves without being told. -- consumers manage that themselves without being told. >> what can you learn from the loon javad a --longevity of a brand like nutella? >> i will my company to grow and years sayne in 50 that about my company. hopefully. iconic, i still have that feeling when i have nutella. it gives me something else that nothing else can. if you can do that with your

brand, then it will have the longevity. >> how many brands have that? >> there are not very many. particularly in the u.k.. we are talking about one or two. ishink the thing about it ands, if you do have that little bit of gold dust, that little bit of magic, you should leverage it, you should use that to build a motion around your brand. nd your brand.u >> what brands have established a strong emotional connection? >> biscuits. i am not a chocolate snob. i like every variety. the packet of biscuits will last me five minutes. >> we did a campaign over this year. it does not try to say, this is

a $.10 biscuit. on the sense of emotion and tries to bring that through your tv. grand you lose that linkage? can you be complacent? they have had it for 50 years. how could they lose that? >> i think you could be distracted. andic brands like coca-cola waltons crisps, good marketeers will recognize that and be able to bring it to the four. >> and don't change it. we do the same thing, the same way. >> that is an interesting point. on the one hand, you have a product that has so much nostalgia and people love it, and on the other hand, there is pressure to innovate and keep the product fresh and keep people interested. how do you balance those two? coming out with nutmeg cinnamon flavored chocolates and keeping

the original? to thecan compare that biggest. -- the samebiggest now as it was years ago. it has a simple portfolio. >> coca-cola's sense of magic comes from keeping itself culturally fresh and being relevant to things like this year's world cup music to young people. the challenge you have is when things shift toward the content of the product itself and dietary issues. coca-cola is the biggest brand, therefore gets the most black. >> if i give you -- flack. >> if i give you all of the ingredients for nutella, could you come up with an identical nutella? >> no. >> why not? >> if i give you all a cake recipe -- >> you are a master. have their sugar, their

mill, their hazelnuts. it the way they make it. you cannot change that. you cannot replicate that. in ay has challenged them big way. i don't think anyone dares. it is so iconic. >> is there a number two? >> no. >> peanut butter. >> how many other spreads can you name? maybe marmite. that is very much a parochial brand for the u.k. >> for the u.k., mainly. [laughter] age? i showing my >> no, you are just showing your poor taste. [laughter] >> i haven't had it for many years. in the 1970's, that was a big brand. >> now you are showing our age. [laughter] >> thank you so much for bringing the chocolate. >> thank you. coming up, deutsche bank and ts qatar.r -- enlis

♪

>> let's have a quick check on the currency markets. dollar-yen today. the haven assets are very much in focus today. clashes in ukraine and anti-china violence in vietnam are prompting demand for haven assets.

the federal reserve will release its minutes from its april 29-april 30 meeting. that is in today's time. it is the flight to quality, the flight to haven it is pushing the yen to a two-month high versus the dollar. >> germany's largest bank has a new shareholder, the qatari royal family. it is part of a plan by deutsche bank to raise 8 billion euros ahead of the stress test this summer. the deutsche bank co-ceo anshu jain spoke to hans nichols. >> timing, i think what you are seeing in the european banking shifting of the tectonic plates. it could be a once in a generation shift. our business model is unique. we spent everything from retail to transaction banking, world management, investment banking and 77 locations, headquartered in frank for. a unique business model.

it is the last one of its type left standing. with the changes that we see, we have decided to get one step ahead and pre-position ourselves with the capital buffer, which will put us in a very strong position. was, why 8 question billion euros? there was no science to that. eurosakes us up to 11.8 -- 11.8 billion euros. that gives us a good buffer against any of the headwinds that could come. we are not providing any financing. >> by changes ahead, you mean ecb asset quality review? >> a whole broad swath of regulatory changes we have seen in the last two or three years. hopefully that will stabilize at some point. we are not counting on it. it is one of many dynamics that could develop.

i'm speaking very broadly about any number of challenges that could come. >> 3 billion was the cost last year for litigation. how much of this new 8 billion is going to be dedicated toward litigation? how can you be certain you will not have another round of capital increase? >> litigation continues to be a challenge for the entire industry. deutsche bank is not an exception to that, unfortunately. we said the 2014 would be another year of litigation challenges. we have conservative estimates built into the plan. we think this capital increase puts us in a strong position to be able to deal with regulation, litigation, and any other challenges. >> it is providing for litigation? >> not specifically. a whole host of challenges. >> one final question. we'll deutsche bank continue to do business with any bank that face criminal guilty pleas? that is a-- hypothetical question -- very difficult for me. >> let me give you a little context.

credit suisse. deutsche bank continue to do work with credit suisse if it pleads guilty? >> that is a hypothetical question -- very hard for me to answer without knowing all the facts. thank you very much. >> let's look at what else we are watching. we are joined by hans nichols, jonathan ferro, caroline hyde. yes no question on doing business with credit suisse. you were very brave. it is a litigation minefield. what is the sense you got from anshu jain? it seems that the fears over capital been displaced. >> well, i think there are a big takeaways. -- a couple of big takeaways. deutsche bank still has global ambitions. they think they are the last man standing. i think they are one step ahead. they think -- are they one step ahead of regulators?

are they one step ahead of a potential lawsuit stateside which would have more litigation cost? other one step ahead of their competitors, who may also be meeting more access to capital? the answer could be all three. what you see there is a confident ceo making his case that his bank is well capitalized for any contingencies. of course, they have no idea what those contingencies are. no one knows until there is certainty on the litigation cost, either in the states or in europe. >> thank you. >> what matters with credit suisse is what anshu jain did not mention. >> consequences of the guilty plea, how big is the fine, the stock is down 1.8%. >> at&t and directv. >> third-biggest m&a deal. it is down to the shareholders

at directv and the regulators. >> well done. how was that? >> terrific. >> welcome back. >> no one is watching tv on tv anymore. keep it right here on bloomberg television. tom keene is coming up next from new york. ♪

>> this is bloomberg "surveillance." brady dougan may exit credit suisse. regulators worked will void.

. shareholders for more capital. .t&t will acquire directv the pfizer and astrazeneca deal comes down to board squabbling over price. good morning, everyone. it is bloomberg "surveillance." monday, may 19. i am tom keene. joining me a scarlet fu and adam johnson. going right to the morning breeze. can there be three or four deals during the show today? >> oeste, starting with economic data. home prices fall once again. undermining growth. in thailand, ongoing protests that have shaved tdp by .6%. emerging markets still up almost three percent this year. >> even with all the buffeting. >> the war in buffeting -- warren buffeting of news. >>