Shire Agrees To £32bn AbbVie Takeover Deal

The board of UK drug firm Shire has agreed to a £32bn takeover deal by American rival AbbVie, it has been confirmed.

Shire said the merger would see its shareholders entitled to £24.44 cash for each share.

The announcement comes on the deadline day for the deal to proceed, amid a record high for Shire shares.

It includes a premium of more than 50% to the stock price of Shire, based on its May 2 price ahead of the initial offer period, and 42% up on an updated June 19 offer.

Shire's share price was up more than 2% in late morning Friday trades.

"The boards of AbbVie and Shire are pleased to announce that they have reached agreement on the terms of a recommended combination of Shire with AbbVie," the pair said in a statement.

The deal comes after Shire reversed its initial opposition to a takeover.

On Monday, the board of London-listed Shire said it was ready to recommend a deal which would value it at £53.20 per share - a rise of more than £2 per share on AbbVie's last bid less than a week ago.

Under the terms of the cash and stock offer AbbVie, which wants to buy Shire to cut its tax bill and diversify its product line-up, would own 75% of the new entity - giving Shire investors a greater stake than the 24% previously proposed.

Dublin-based Shire, which makes drugs to treat rare diseases, had rejected four earlier offers and asked AbbVie to sweeten its bid in order to recommend an agreement to its shareholders.

AbbVie's pursuit of Shire comes just weeks after AstraZeneca fought off takeover interest worth £69bn from US drugs giant Pfizer.

Shire has been under pressure to secure new products, as it currently gets nearly 60% of its revenue from rheumatoid arthritis drug Humira, the world's top-selling medicine, which loses US patent protection in late 2016.

Earlier this week, Professor John Lyon, of Warwick Business School, said: "Shire may be headquartered in Dublin but it is managed from Boston where most of its medicines are sold.

"It is well known for targeting rare diseases with its medicines where accelerated drug development pathways are sometimes available once an orphan drug status is agreed with the regulatory bodies."

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Malaysia Airlines Offers Passenger Refunds

Malaysia Airlines is to refund fares for passengers no longer wishing to travel on the carrier, Sky News has confirmed.

Previously booked passengers due to fly up to and including July 25 can seek a refund without incurring any penalty.

The decision comes amid a wave of concern following the downing of MH17 over eastern Ukraine.

It is unclear how many passengers will cancel their flights.

Nevertheless, the refund will further harm the perception of the carrier both for passengers and investors.

Shares in Malaysia Airlines closed down more than 10% on Friday.

The Kuala Lumpur-listed company saw its stock fall more than 17% at one point before easing prior to the market close.

"Perception-wise it really hits home - It's very challenging. It's very difficult to fight against negative perception," Maybank aviation analyst Mohshin Aziz said.

"I can't comprehend of anything they can do to save themselves."

Many of the carrier's woes precede the loss of MH370 earlier this year

The company has struggled recently, and its accounts have been in the red for the last three years.

In 2013, the airline's full-year losses grew to £215m - up almost threefold on the 2012 loss of £80m.

The Malaysian government owns 69% of the firm.

As a state-owned flag carrier, it is required to fly unprofitable domestic routes, and its strong union has resisted operational changes.

Budget rivals have adapted to the changing air market, particularly in Asia, with greater speed than legacy carriers such as Malaysia.

Many of its woes precede the mysterious loss of flight MH370 in the Indian Ocean.

Airline Weekly managing partner Seth Kaplan described it as being in "worse shape" financially than almost all other carriers - even before MH370 vanished.

"It's just hard to imagine that they could have even survived the first incident without a lot of government help and now they're going to need even more," Mr Kaplan said.

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Top City Banker To Pay £450,000 FCA Penalty

By Mark Kleinman, City Editor

One of the City's top financiers is poised to pay a £450,000 fine after deciding to accept a market abuse ruling by the Financial Conduct Authority (FCA).

Sky News understands that Ian Hannam, a banker who became known as the 'king of mining M&A' after engineering some of the world's biggest natural resources mergers, is to accept the watchdog's original verdict after losing an appeal in May.

An insider said on Friday that a statement from the FCA confirming that the original decision is to be upheld is expected as early as next week.

Mr Hannam, who had a long career at JP Morgan Cazenove before leaving in 2012, was accused by the FCA of inappropriately disclosing inside information in 2008 about Heritage Oil, a client, to a potential buyer.

He had argued that the FCA's ruling was erroneous and that he acted in accordance with City rules, vowing to fight the decision.

The regulator did not accuse or find Mr Hannam guilty of deliberately setting out to commit market abuse or accuse him of lacking honesty or integrity.

The Upper Tribunal of the High Court rejected his appeal in a judgement which was greeted by relief at the FCA but which raised questions about the clarity of guidelines about acceptable City conduct.

Both parties are understood to have made representations about the scale of the fine following the verdict of the Upper Tribunal, which said:

"Although the parties' written submissions did say something about the appropriate penalty if Mr Hannam had been engaged in market abuse, we consider that we cannot properly deal with this aspect of the case without giving the parties the opportunity to make further submissions in the light of our findings on the substantive issues.

The tribunal and the parties will need to consider the best way forward procedurally for dealing with the question of penalty."

The ruling left open the question of whether the penalty imposed on Mr Hannam should be increased or decreased.

Mr Hannam, who received backing from a number of prominent City figures and company bosses during his appeal, is said to have racked up legal fees of approximately £1m during his case.

Since leaving JP Morgan, he has rebuilt his career, taking control of a number of businesses in the mining and resources industries.

He has also given financial backing to Heathrow Hub, one of the shortlisted candidates for expanding runway capacity in south-east England.

Spokesmen for Mr Hannam and the FCA declined to comment on Friday.

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Bestway To Buy Co-op Pharmacy Arm For £620m

The embattled Co-operative Group has agreed to sell its pharmacy division to Bestway for £620m.

In a statement, the Co-op said the sale would be completed in October, following the successful separation of the division from the parent group.

The sale proceeds would be used to help reduce group debt and plug a capital black hole of more than £1.5bn.

Sky News City Editor Mark Kleinman revealed last March that the Co-op was lining up City advisors for the pharmacy sale, at the time estimated to be around £600m.

As the Co-op attempted to rein in its massive debt a decision was taken to sell the profitable pharmacy section, with the proceeds injected into its retail and consumer services division.

As part of the deal the Co-op said it would provide transitional assistance for up to 18 months and would include branding continuation for up to a year.

Bestway is the UK's 18th largest privately owned company and seventh biggest family-owned business.

Co-op Group interim group chief executive Richard Pennycook said: "The successful sale of our pharmacy business is an important move for (the group).

"The proceeds will enable The Co-operative to reduce debt and invest in our business and is part of the focused delivery of our clear strategic plans and priorities.

"I am pleased that the agreement we have reached with Bestway reflects the quality of the business and the high level of interest from a number of bidders."

With this acquisition, Bestway will have an annual turnover of approximately £3.4bn and a global workforce of more than 32,600 people, with nearly 12,000 people in the UK.

It owns the UK's second largest independent wholesaler serving 125,000 independent retailers and caterers, from 64 warehouses nationwide.

It also operates Pakistan's second largest cement manufacturer, with an annual capacity of 6 million tonnes.

Bestway group chief executive Zameer Choudrey said: "We are delighted to be bringing The Co-operative pharmacy business into the Bestway family, adding to our growing and diverse business portfolio.

"In line with our own ethos, there is a strong focus on supporting and servicing the needs of the local communities within this business."

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Retail Banks Face Competitiveness Probe

The competition watchdog has confirmed it is consulting on a provisional decision to launch an in-depth investigation into the retail banking sector.

The Competition and Markets Authority (CMA) said essential parts of the UK market lack effective competitiveness.

The CMA said the existing structure did not meet the needs of consumers or that required by small and medium-sized enterprises (SME).

It said there will now be a consultation for an in-depth market investigation for personal current accounts and SME banking.

The watchdog said despite claims of competitiveness, customers have not benefited sufficiently from attempts to open up the market.

Recent changes have included a simplification of switching current accounts between providers.

The CMA said it would possibly launch a full-scale market investigation but has told the "big four" banks - Barclays, HSBC, Lloyds Banking Group and Royal Bank of Scotland - to offer an industry solution.

It said a formal decision on the investigation would be made in the autumn.

The current account sector is around £8bn in size, while the SME sector is worth £2bn.

The watchdog commissioned two reports, one into current accounts and the other into SME functionality.

The SME banking market study was a joint project with the City watchdog, the Financial Conduct Authority (FCA).

It was the first formal collaboration between the organisations since the CMA was formed following a merging of the Office of Fair Trading and the Competition Commission.

The CMA said it was interested in hearing from consumers and companies about their experiences.

It said there appeared to be limited scope for newer and smaller banks and the markets remain concentrated, particularly in Scotland and Northern Ireland.

It added that there was very little movement in the market share of the largest banks - other than as a result of mergers and acquisitions.

The CMA said many customers see little difference between the largest banks in terms of the services they offer.

In addition, it said limited transparency and difficulties for customers in making comparisons between banks, particularly for overdraft charges, are "very complex".

"This makes it hard for customers to choose the cheapest or most appropriate accounts for them, so limiting banks' incentives to compete," the CMA said.

"This may result in higher overdraft charges than would otherwise be the case."

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Microsoft Cuts 18,000 Jobs In Nokia Cull

Microsoft has confirmed plans to "eliminate" up to 18,000 jobs worldwide as part of efforts to simplify the company's operations and cut costs.

The announcement was made in an email to staff entitled 'Starting to Evolve Our Organization and Culture' by new chief executive Satya Nadella, who is moving to reshape Microsoft into a cloud-computing and mobile-friendly software company.

The $7.2bn (£4.2bn) purchase of Nokia's mobile division - which is being integrated into Microsoft - was to account for the majority of the losses, Mr Nadella said, as overlaps were identified.

The deal, completed in April, added 28,000 positions to Microsoft's payroll.

The company, which now employs 127,104 people globally, has 3,500 staff in the UK but no announcement was made on exactly where the cuts would be made, apart from identifying 1,300 losses in Seattle.

It estimated costs of up to $1.6bn (£1bn) initially before any savings would be felt.

Mr Nadella told staff: "The first step to building the right organisation for our ambitions is to realign our workforce.

"With this in mind, we will begin to reduce the size of our overall workforce by up to 18,000 jobs in the next year.

"Of that total, our work toward synergies and strategic alignment on Nokia Devices and Services is expected to account for about 12,500 jobs, comprising both professional and factory workers.

"We are moving now to start reducing the first 13,000 positions, and the vast majority of employees whose jobs will be eliminated will be notified over the next six months.

"It's important to note that while we are eliminating roles in some areas, we are adding roles in certain other strategic areas.

"My promise to you is that we will go through this process in the most thoughtful and transparent way possible.

"We will offer severance to all employees impacted by these changes, as well as job transition help in many locations, and everyone can expect to be treated with the respect they deserve for their contributions to this company."

Microsoft's share price rose more than 1% in pre-market trading after news of the plan was confirmed.

The shake-up was seen as central to the company's shift from being software-focused to one that sells online services, apps and devices it hopes will make people and businesses more productive - challenging the dominance of firms like Samsung, Apple and Google.

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Putin: Sanctions Could Cause 'Serious Damage'

Vladimir Putin has warned a fresh wave of sanctions will take US relations with Russia to "a dead end" and damage America's business interests.

The US and the EU have stepped up measures over what is viewed as Russia's interference in Ukraine.

President Barack Obama has imposed the most wide-ranging sanctions yet, targeting major banks, energy and defence firms including Gazprombank and Rosneft Oil Co.

Steps are also being taken to prevent rebel groups and senior officials in Ukraine getting hold of funds.

"Sanctions have a boomerang effect and without any doubt they will push US-Russian relations into a dead end, and cause very serious damage," Mr Putin said.

Mr Obama announces fresh wave of sanctions

"And I am convinced that this will harm the national long-term interests of the American state, the American people."

Mr Obama said the US measures were "significant but targeted".

"I've repeatedly made it clear that Russia must halt the flow of weapons and fighters across the border into Ukraine.

"So far, Russia has failed to take any of the steps that I mentioned."

Meanwhile, EU leaders meeting in Brussels agreed a more limited package.

They agreed to impose asset freezes against around 11 more individuals but said measures will be expanded significantly at the end of July to cover "entities and persons" helping to undermine Ukraine's "sovereignty, territorial integrity and independence".

The European Commission will also "reassess and potentially suspend" co-operation programmes with Russia.

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Shale Gas Terminal 'Saves' Grangemouth

The owners of the Grangemouth terminal, threatened with closure last year, say its future has been secured by a Goverment loan to help build a shale gas facility.

Ineos says the promise of £230m would allow it to raise funds to invest in a new terminal to import, store and process ethane from shale gas as North Sea supplies dwindle.

The company said it was one of the most important infrastructure projects of recent times in Scotland and would protect thousands of jobs across the UK by ensuring the long-term future of petrochemical manufacture at Grangemouth.

The ethane tank will be the largest in Europe and is central to the company's plans to import shale gas from the US - a product that has helped bring down world gas prices but is controversial because of the use of a process called fracking to extract it.

The prospect of UK-based fracking has faced stiff opposition from environment campaign groups and communities, though ministers argue it is needed to bring prices down and boost gas supplies.

Under its plans, Grangemouth will, by 2016, be a shale gas-based facility, which Ineos said was essential if it is to compete in world markets beyond 2017.

The future of the site was in doubt last year because of an industrial dispute, but Ineos said it had invested £300m as part of a long-term survival plan.

Chief Secretary to the Treasury Danny Alexander said: "Over £1bn of infrastructure projects have now been brought forward as a result of the UK guarantees scheme and £36bn worth of projects are pre-qualified.

"Our action is creating the right conditions for more investment in our infrastructure, helping to build a stronger economy and a fairer society across the country.

"The Grangemouth guarantee is fantastic news for Scotland's economic future, and for the UK's energy security."

More follows...

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Eurostar Growth Takes World Cup Penalty

Eurostar has blamed football's World Cup for a slowdown in passenger and revenue growth.

The Channel Tunnel high-speed train operator said demand was affected by a rising number of people choosing to stay at home to watch the tournament in Brazil in the final weeks of its first half trading period.

Nevertheless, Eurostar reported 2% growth in passenger numbers over the first six months of 2014, rising to 5m from 4.9m a year previously.

Sales revenues also grew by 0.5% to £456m from £453m.

The company said the "convergence" of Easter and May holidays this year had also not helped its business as travellers were booking only one trip under the English Channel, when previously they may have booked more.

Eurostar chief executive Nicolas Petrovic said: "While a number of factors in the second quarter of the year led to a dampening in demand, we are now beginning to see a more benign trading environment with encouraging signs of economic stability in France as well as the UK".

As well as its small rise in passengers, Eurostar saw an increase of 6% in more luctrative business bookings compared to the same period in 2013.

Mr Petrovic added: "These more favourable conditions have helped deliver strong growth in business travel across our markets".

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Watchdog Warning On Price Comparison Sites

Some price comparison websites are failing to meet regulatory standards, according to the Financial Conduct Authority (FCA).

The City regulator found operators in the general insurance sector, which includes property and vehicle cover, were not meeting consumers' expectations and did not always ensure that people were given appropriate information to help them make informed decisions.

The FCA said it was particularly concerned that consumers' focus on headline price and brand when using such sites could distract from crucial product features, such as policy coverage and terms.

As a result, the websites were increasing the risk that consumers bought products without understanding key features such as level of cover or excess levels.

Clive Adamson, FCA director of supervision, said: "Price comparison websites have increased in popularity among consumers, with an estimated one third of consumers buying their motor insurance policy through them.

"They provide an important service for millions of consumers bringing convenience and simplicity to buying financial products online.

"However, our review found that they were not meeting our requirements in delivering fair and consistent outcomes for consumers. 

"We also found, through our consumer research, that consumers had a number of misconceptions about the services they provided.

"We expect price comparison websites to take on board the findings of the review.

"It is also important for consumers to understand that not all products are the same and the cheapest product may not always be the best for their needs".

The review's survey also found some people mistakenly believed that a price comparison website had provided them with quotes on the best policy for their individual needs and had assessed the suitability of the policy for them. 

The FCA said too that not all comparison sites, that were part of a larger group of an insurer or broker, disclosed this potential conflict of interest, which was against FCA rules.

The watchdog declined to name any firm found to be at any fault.

Hayley Parsons, the chief executive and founder of Gocompare.com, told Sky News it had contributed to the review and supported efforts to improve standards though it had "always strived" to operate in its customers' best interests.

She said: "Gocompare.com fully supports measures to promote best practice in the PCW industry.

"Although we regularly update our services to reflect our customers' evolving needs, we will be reviewing the findings of the FCA's report".

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