Innocent Bottler Drinks To £1bn Buyout Deal

By Mark Kleinman, City Editor

The bottling group which works with well-known brands such as Innocent Drinks and Sunny D is preparing to kick off an auction that could value it at well over £1bn.

Sky News understands that shareholders in Refresco Gerber have hired JP Morgan, the investment bank, to oversee a so-called dual-track process that will examine the merits of a sale or stock market flotation.

Investors in the company include 3i, the British-based private equity group, which owns 20%, and an Icelandic consortium which abandoned a previous attempt to sell it during the global financial crisis in 2009.

Sources said on Tuesday that private equity firms such as Blackstone and Kohlberg Kravis Roberts were among the likely bidders for Refresco Gerber.

Both have invested in the sector before, with Blackstone among the bidders last year for GlaxoSmithKline's Lucozade and Ribena brands, which were eventually sold to the Japanese drinks group Suntory.

Refresco Gerber, which is based in Rotterdam, employs nearly 5,000 people including hundreds of UK-based staff.

Its operations across Europe include bottling contracts for brands such as Ocean Spray and Del Monte, and its retail customers, for which it produces own-label juices and other drinks, include Asda, J Sainsbury, Tesco and Waitrose.

Other shareholders in Refresco Gerber include Hanover Acceptances, an investment company owned by Manfred Gorvy, a South African-born financier. The Financial Times reported last month that he was unlikely to be willing to sell his stake in the company.

A deal valuing Refresco Gerber at more than £1bn including debt would yield a healthy return for 3i, which has improved its performance under Simon Borrows, who was parachuted in as chief executive two years ago.

In total, the company produces about 1.4 billion gallons (6.5 bilion litres) of juice and other drinks annually.

Refrescoe Gerber was formed from a merger last year of Gerber Emig and Refresco with the aim of creating a Continental powerhouse offering customers a full range of logistics services in addition to production and bottling.

A London flotation of the business remains a possibility although some bankers believe a sale is far more likely.

3i and JP Morgan both declined to comment.

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Top Tesco Executive Quits Ahead Of Key AGM

By Mark Kleinman, City Editor

Another top executive at Tesco has resigned, casting renewed doubt on the efforts of the company's chief executive to transform the performance of Britain's biggest retailer.

Sky News has learnt that Neela Mukherjee, the UK general merchandise director, decided to quit following a reshuffle of Tesco's UK management team.

The news of her departure, which makes Ms Mukherjee the latest in a long line of senior managers to leave since Philip Clarke took over as Tesco chief executive in 2011, comes just three days ahead of what could be a stormy annual meeting for the supermarket giant.

Tesco has reported a string of dismal trading updates during the last two years, culminating in this month's announcement that like-for-like sales had fallen by 3.8% during the quarter to the end of May.

Mr Clarke said the performance was the worst he had known in his nearly 40 years with the company, intensifying the pressure on him to accelerate a turnaround plan.

Friday's annual meeting will also come in the wake of the first public criticism of Tesco's performance from Mr Clarke's predecessor, Sir Terry Leahy, who told Sky News recently that he was "disappointed" about the lack of progress.

Insiders said that proxy votes collected ahead of the AGM suggested that there would be overwhelming support for all of the key resolutions, including the re-election of its entire board, and on directors' remuneration.

Mr Clarke and senior colleagues have not been awarded bonuses in recent years, reflecting the malaise at Tesco, and he warned this month that he could not make "any promises about sales improving in the next few quarters".

The major grocery retailers are locked in a new price war, the need for which has been exacerbated by the success of discounters Aldi and Lidl.

This week, Morrisons, which is also struggling, said it was reducing prices further on dozens more 'everyday' products.

Ms Mukherjee's departure from Tesco was confirmed in a statement, which said: "Neela has decided to pursue her career outside of Tesco.

"She made a significant contribution in her 12 years at Tesco, both internationally and here in the UK."

Her exit underlines the extent of the managerial instability beneath Mr Clarke.

His latest reshuffle included promoting Robin Terrell, the group multichannel director, to take on responsibility for general merchandise, which includes electrical goods, homewares and stationery.

Ms Mukherjee had herself only been appointed to the role in November 2012 following stints in Tesco's online and Malaysian operations.

Tesco is in the process of recruiting a new chief financial officer to replace Laurie McIlwee, who is quitting after clashing with Mr Clarke.

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Nokia X2: Microsoft Unveils Android Phone

Microsoft has unveiled its first ever Android phone, two months after completing a takeover of Nokia's mobile phone division.

The Nokia X2 is a follow-up to the original X - which became the best-selling phone in Pakistan and third biggest seller in India, as well as notching up strong sales in Russia, Kenya and Nigeria.

Microsoft's decision to use Google's Android operating system to power the device is a surprise to some experts - as Android is a rival to the firm's own Windows Phone OS. 

The company is looking to emerging markets - billing the "affordable" phone as the device to introduce the "next billion" people to mobile internet and cloud services. 

As well as access to the world of Android apps, the X2 offers a bigger 4.3in screen, more memory (1GB) and a more powerful battery than its predecessor.

It will come preloaded with Microsoft's video chat app Skype, Outlook email and OneDrive internet storage.

The phone's tiled home screen and scrollable list of apps mirrors Microsoft's phone user interface and the company is hoping the cheaper model may eventually inspire users to upgrade to its more expensive Lumia devices.

The handset will cost £80 ($135) when it is released in July and initially be available in glossy orange, black and green, with glossy yellow, white and matte dark grey available at a later date. 

Timo Toikkanen, head of mobile phones at Microsoft Devices Group, said: "The Nokia X2 elevates the Nokia X experience with a stellar new design, ease of use and new Microsoft experiences.

"We're proud to continue to bring smartphone innovation to lower and lower price points."

Microsoft's £4.4bn ($7.4bn) takeover of Nokia's phone handset division went through on April 25.

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Dozens Of Flights Cancelled Over France Strikes

By Mike McCarthy, Sky News Correspondent

Thousands of air passengers are facing travel disruption due to a strike by air traffic controllers in France.

The action, starting today, is expected to last for six days. Last night, French authorities were still trying to assess the likely impact.

Airports in the UK say the industrial action is likely to affect many flights using French airspace including those to Spain.

EasyJet, which is the second biggest airline in France, is telling customers they have cancelled 20% of flights.

These include a number of flights from Lyon, Marseille, Toulouse, Bordeaux, Paris Orly, and Paris Charles de Gaulle.

EastJet has promised refunds to passengers

The airline says it is doing everything it can to minimise the impact on customers and that all those on affected flights will be informed by text message or email.

Ryanair told Sky News at least 125 of its flights were cancelled on the day.

It has promised to offer free transfers to a new flight or a full refund for travellers hit by the action. 

The company has advised people against re-booking journeys between today and June 30, because of the likelihood of further disruption.

Cancellations and delays may be significant but are not expected to be as bad as first feared. One of the two French unions involved called off its action after talks. 

The unions are opposed to plans for a re-organisation of air navigation in France.

Airports and airlines have been planning in an effort to avoid as much of the disruption as possible.  

Each week 17,000 seats are available between France and Manchester alone.

Manchester airport, which is part of a group including Stansted, East Midlands and Bournemouth, says up to 13,000 passengers could be affected this week.

It has advised passengers who are concerned to check with their airline before arriving at the airport.

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Apple's Angela Ahrendts Posts Personal Blog

Apple's Angela Ahrendts has told of her "life-altering" decision to quit the fashion world in her first public comments since starting as the tech giant's retail chief.

Ms Ahrendts was poached from Burberry amid great fanfare last October and is tasked with revitalising sales online and in Apple stores around the world as the company grapples with slowing growth.

In a personal blog post on her LinkedIn page, the 53-year-old American writes about the "exciting, challenging and sometimes disorienting" start to a new job, less than two months after starting at Apple's Cupertino, California, HQ.

Along with advice for anyone moving to a new business, she jokes: "Silicon Valley can feel like a country unto itself!"

Ms Ahrendts, who was credited for Burberry's transformation into a leading luxury brand, writes: "Last month, as you might have heard, I started a new job.

"At some point in your career, maybe you too have made the life-altering decision to start anew.

"If so, you know firsthand how exciting, challenging and sometimes disorienting the first 30, 60, 90 days can be. I've been thinking about this a lot lately myself."

She advises other new employees to "stay in your lane" - meaning concentrate on using the skills you were hired for, rather than trying to master the unfamiliar elements of the job.

She also quotes poet Maya Angelou, who died last month, and offers a tip gained from her own father: "Ask questions, don't make assumptions."

Regulatory filings when Ms Ahrendts started at Apple showed she was awarded a "golden hello" of shares worth £40m in the company.

She is also reported to have taken home £16m as part of a leaving settlement following completion of her notice period at Burberry, where she was replaced by chief creative officer Christopher Bailey.

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WPP Pay Rebel Changes Tack Ahead Of AGM

By Mark Kleinman, City Editor

One of the most trenchant City critics of pay at WPP Group is to change tack by voting in favour of remuneration policies at this week's annual meeting of the world's biggest marketing services provider.

Sky News understands from fund management sources that Scottish Widows Investment Partnership (SWIP), which holds a stake of more than 2% in WPP, has decided to support last year's directors' pay report as well as a binding vote on future policy.

The decision is a surprise since SWIP, which is now owned by Aberdeen Asset Management, has voted against resolutions on pay at previous WPP AGMs.

Wednesday's shareholder meeting, which will be held at the Shard, the City skyscraper, is expected to see well over 70% of investors supporting the WPP board once abstentions are taken into account.

Excluding abstentions, the vote in favour is likely to be above 80%, slightly ahead of last year's figure.

City sources said that other notable supporters of the pay resolutions were likely to include Blackrock and Legal & General Investment Management, while Standard Life Investments, another leading institution, was expected to oppose the board.

Some investors have expressed reservations about the earnings of Sir Martin Sorrell, WPP's chief executive, who received total remuneration worth nearly £30m last year.

That figure represented a hefty increase on the previous year's £17.5m package, although some leading shareholder proxy groups have recommended voting in favour because more than 90% of Sir Martin's remuneration is performance-related.

The near-£30m deal included £22.7m awarded under a long-term share scheme which was handed to him after a surge in the company's share price.

WPP had a successful 2013, benefiting from the turbulence caused by the ultimately-aborted merger talks of its two principal rivals, Omnicom Group of the US and France's Publicis Groupe.

Last weekend, WPP, which owns agency networks such as JWT, Ogilvy & Mather and Young & Rubicam, won prestigious awards for being the most creative and effective marketing services holding company at the Cannes Advertising Festival.

The WPP boss has been a staunch defender of his pay, frequently pointing to the risks he took to fund its growth during precarious phases of the company's expansion.

One ally of Sir Martin's pointed out that during the five-year period covered by the £22.7m share payout, there was a £12.35bn uplift in returns to WPP's wider shareholder base.

Reforms to WPP pay policies saw investor support for the company's remuneration report rebound to 80% last year from a meagre 40% in 2012.

Vince Cable, the Business Secretary, has forced an overhaul of the way companies report executive pay, and handed shareholders a binding vote on future compensation policies.

Votes on the previous year's pay deals, which have seen bloody noses given to boards at Barclays and Pearson this year, remain non-binding.

A WPP spokesman said previously: "The vast majority of Sir Martin Sorrell's pay relates to the five-year LEAP scheme already disclosed and designed to link long-term shareholder value creation with executive rewards as prescribed in Vince Cable's recent communication with companies."

The spokesman declined to comment on shareholders' voting decisions ahead of Wednesday's AGM.

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Carpetright Profit Trampled By Consumer Fears

High street flooring firm Carpetright has seen its full-year pre-tax profit drop by more than half, which the firm is blaming on falling consumer confidence.

It said in the 52 weeks to April 26, group pre-tax profit was £4.6m, down 52.6% from £9.7m a year earlier.

Total revenue for the year was £448m, down 2.2% on the 2013 figure of £458m.

UK like-for-like sales declined 0.2% in the year, while European operations reported a significant loss.

The company said in a statement: "Operations in the UK continued to be challenged by a fragile consumer environment where the disposable incomes of our customers remained under pressure."

Carpetright said the drop was also partially the result of the costs involved in ending or renegotiating leases at unprofitable out-of-town stores.

The company, which has a large freehold property portfolio, reduced its total store count by six in the year and now has 614 stores.

It has 472 outlets in the UK, 95 in the Netherlands, 26 in Belgium and 21 in Ireland.

The most significant impact came from an overhaul of its Dutch operations, in what it described as "extremely difficult trading conditions".

It added: "The key driver in the performance of the rest of Europe continues to be the deterioration of consumer confidence in the Netherlands, where the floor coverings market remains weak."

Carpetright said it was expanding its online presence, improving search engine optimisation and has modernised more than half of its stores.

No dividend would be paid to shareholders.

The company has sought to renegotiate leases in the unprofitable out-of-town locations and expects to reduce the store count further when lease contracts expire within the next four to five years.

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Living Wage: 'National Scandal' Of Working Poor

The number of workers living in poverty is a "national scandal" and measures must be taken to pay people a better wage, according to a report.

Unless the Government makes a commitment to helping to increase pay to a living wage people will continue to rely on food banks and loans they cannot afford, the Living Wage Commission has said.

It recommends a number of ways of enabling firms to pay £8.80 an hour in London and £7.65 outside the capital – the amount it says is necessary to ensure a socially acceptable quality of life.

The current minimum wage is £6.31 an hour.

Commission chairman Archbishop of York John Sentamu, said: "Working and still living in poverty is a national scandal. For the first time, the majority of people in poverty in the UK are now in working households.

"The campaign for a Living Wage has been a beacon of hope for the millions of workers on low wages struggling to make ends meet. If the Government now commits to making this hope a reality, we can take a major step towards ending the strain on all of our consciences. Low wages equals living in poverty."

It has suggested higher taxes and reduced in-work benefits in private firms could be used to increase the pay of half a million public sector workers.

The commission said the Government needed to set a goal for the voluntary take up of the living wage to encourage firms to increase pay.

Dr Adam Marshall, director of policy and external affairs at the British Chambers of Commerce, said: "Some businesses simply cannot afford to pay a living wage just yet - which is why the Commission rejected a compulsory living wage.

"The task now is to support as many employers as possible to make this transition, because paying the living wage can benefit employers as well as their staff."

Unions have cautioned that despite signs of economic recovery, wages are still lagging behind the increase in the cost of living.

Business Secretary Vince Cable warned that if were firms to pay the living wage it could affect the number of jobs on offer and that Government tax cuts had helped make people better off.

He said: "The only real way of achieving sustainable increases in living standards is by focusing on economic growth, employment and reducing taxes for the low paid. This is exactly what we are doing."

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Bank Of England Governor Cools Rate Rise Talk

The governor of the Bank of England has moved to cool speculation he will trigger a base interest rate rise sooner rather than later.

Mark Carney told the Treasury Select Committee (TSC) that there is additional spare capacity in the UK labour market that can be absorbed before the rate, used as a benchmark for home loans and saving, is increased.

He stressed that the timing of any rate rise is not as important as the fact any increase in the base rate will be "limited and gradual".

The pound strengthened on foreign currency markets, up against both the dollar and euro in late morning trades.

Mr Carney also stressed the importance of real wage growth to the recovery, saying "wage data is still softer than expected", adding that the latest data was giving the impression that a pick up in earnings growth could be imminent.

He told the committee that he expects the base rate, in five years' time, to be "materially below" the historic average of 5%. It currently sits at a historic low of 0.5%.

TSC member and Labour MP Pat McFadden said the bank's shifting position on rates was like an "unreliable boyfriend - one day hot, one day cold".

In recent days Mr Carney has hinted that a rate rise may occur in coming months. Many analysts expected a rise before the end of 2014.

Deputy governor Charlie Bean also told MPs that all of the bank's Monetary Policy Committee members were struck by the markets' high degree of certainty before June 12's Mansion House speeches, where hints on a rise were given.

Mr Carney's TSC comments come as new figures have been released showing the impact of the Mortgage Market Review rules starting to bite.

The sector most affected has been those trying to get a better deal with current providers or swapping to another lender for a more competitive rate.

The number of homeowners re-mortgaging their properties has dropped 11% in a month, according to the British Bankers' Association (BBA).

It said approved re-mortgages in May reached 18,206, down 11% on April's figure of 20,448.

The BBA said that in comparison, the number of house purchase mortgages remained virtually flat in May, at 41,757.

On Monday, big homebuilders and property management firms were hit as investors started to shift out of the sector, fearing a slowdown in construction.

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Pubs Lose Out After England's World Cup Exit

As England fans take down their flags after a disappointing World Cup, businesses have started to count the cost of an early exit.

According to the British Beer & Pub Association (BBPA), estimates have been slashed for the benefits its members gain from the game against Costa Rica.

It comes as England bow out early from the World Cup, after suffering defeats from Italy and Uruguay - and Costa Rica's two wins against others in Group D mean mathematically that the Three Lions' campaign has ended.

The association said it expected two million fans to watch the final game in pubs - down 43% from a forecast 3.5 million if England had hopes of progression.

It said an extra four million pints of beer would be sold, down a third on an original calculation of six million pints.

It also forecast the total extra turnover for the game would hit £15m, whereas the original estimate was double, at £30m.

In comparison, the BBPA said that during England's first game - against Italy - £20m was spent in bars and pubs.

A 50% increase in pubgoers was also estimated for the Italy game, with some three million people watching it in licensed venues.

They also supped six million extra pints during the first game, according to the BBPA.

But some firms have seen benefits from the early shower and exit for the England team in Brazil.

A Poundland spokesperson told Sky News: "Our England supporter range has delivered a first class performance with almost 500,000 items sold, a 60% increase in sales compared to the last tournament in 2010."

And according to Travel Weekly, tour operator Thomas Cook saw traffic volumes on its website double last weekend - as disappointed fans sought to leave England's woes behind.

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