They have abandoned their 35 billion deal to create the worlds biggest advertising company. Both Companies Say they could not overcome obstacles that delayed the process. For more, lets get right to Martin Sorrell. Thank you very much. How are you . I am good, thank you. Are you feeling a sense of schadenfreude today . I would not know how to spell that. Anyway, i do not think we are surprised. Thingy 7, when the whole was announced, we said it was strategically and structurally challenged with regulatory problems. Surprised with the speed with which it fell apart. We thought it would go through to july 27, when the 500 million feet would lapse 5 million fee would lapse and both parties could walk away with their tails between their legs. I think we said it was strategically and structurally challenged and that has proven to be the case. Or martin, when i started in business many years ago, i was always told that there is no such thing as a merger of equals. Does this prove the point . I was told that, too. The reason this did not happen because it was proving to be a do not think that either party really spent a lot of time on the details before maybe it is one of the weak points of our industry that we do not think about the details. Egotisticalfor reasons. I think one is left with a lingering impression that it was both ceos sat in the room for six months. Maybe they should have had a few expensive advisors around. ,f you look at what is going on the detail with which that deal it was also described as a merger of equals, that had its structure well worked out from before and detailed implementation before the announcement. This suffered from it being an emotional, rather than a strategic and practical set of decisions. Lack of forethought and ill conception from the beginning. The deal was obviously causing consternation to shareholders, to clients, and employees. What is the reputational damage from this . I do not know. We have to see. I do not think this is the end of the story. There will be more fallout from the results. Ceos makes a very significant and surprising decision and they spent 10 months wrestling with it, the regulatory authorities have not it must be al, couple of hundred Million Dollars between them on this deal up to now and there must be some questions raised about what they have done and how they have done it. I think there will be continued fallout as a result. From our point of view, the best result would have been that there was some sort of state of suspended animation that could have continued on for long periods of time with the announcement of no regulatory consent. We have gained significant amount strategically. We have taken people on a ratio of about four 21. One. O another good month. We just got our results and they were stronger than the First Quarter. Both the revenue and gross margin levels. When it comes to mna in publicist will search for public group of companies. Theyre likely to seek acquisitions. We know you are highly inquisitive. . Hat permutations are out there who is going to search for who next . We will remain focused on small and mediumsized deals. Bloomberg as number one or number two in the last two and three years together with google and intel. We will continue to do small and mediumsized deals. My bet would be that they will go for ipg. , they willrpay probably it will be another field day for us all. That would be my bet. My bet would be that it ends up inside vivendi. Does it matter that you are number one or number two . Is it ultimately important to you . I think if my mom was still alive, it would be important to her. Dad to my mom, or my beyond my mom, or my dad, probably little or none. It is more of the issue of whether we thought from the very beginning that putting the number two and three together was illconceived. The two companies are very different and the two ceos are very different. I was talking to one omni, executive in beijing this morning he said to me that the Smoke Signals started to come up in december. Was thatgoing around he would never go back to paris unless it was for morris leavys leaving. If you had one bit of advice, what would you say . When the deal was leaked by bloomberg, i was asked by bloomberg as to what i thought about the possibility of two of our competitors merging and one of them would not be ipg. Saying if you are going to be chairman, can i be cfo . No. Said no point in giving them any advice. Thank you for chatting to us. Sir Martin Sorrell speaking to us from china. Jonathan ferro is here. Sir martin saurav four sorrell, always good. It is about power and generating market share. They are talking about it breaking down because of tax issues. The analysts are talking about the same thing. It is managerial. Organizational structure. The sticking point, everybody was talking about one thing, the conflict of client interest. On, ourer it goes clients interests are starting to be hit by this. That is what you have to talk about. It just does not stop here. What is the hangover of the breakdown of this deal . What does it mean for the industry . What if it means for the clients that have been left hanging . Martin sorrell has made a point that he has managed to put his strategy in place. He wanted it carry on. Is a key point. This deal got announced in july. Had they been able to implement their own strategies aggressively it was all about scale, wasnt it . Going into the digital revolution aggressively. But it was less about synergies and more about it was less about synergies and more about financial firepower. They have lost 12 months now. They have to start again. Is it over on the consolidation side of things . That is going to be very interesting. Good to chat, thank you. It is friday morning, the big news. Apple is said to be in talks to acquire dr. Dres headphone maker for 2. 3 billion. Applegate outld of acquiring what would applegate out of the deal like this . The line of very popular headphones that have been gaining ground. People are Walking Around with these stereos in their pocket, the use of these headphones is proliferating. On top of that, subscription Music Service in which somebody pays 10 a month for access to unlimited access to the songs on your phone or through a web browser. Now, has mainly just had itunes, which you use by downloading a song at a time. Some of these other services out there have a subscription fee. What does it say about future products from apple and dr. Dre . Apple has resisted doing the kind of subscription service. Itunes is the biggest outlet for buying music in the world. Digital download sales have been falling. Last year was the first year that tracks sales fell ever. Openingws that they are open to moving in a new direction where Younger Companies where you pay a subscription fee and you get unlimited access to all of this music and you can personalize it. Apple to dosual for a deal of this size . This deal right now is being valued at about 3. 2 billion, which will be by far the biggest deal apple has ever done until now. One of the biggest deals was about 400 million when they bought the company next to bring steve jobs back into the fold. This is an unprecedented deal for them if it goes through. If they completed. It signals a new era for them in terms of how they do acquisitions. Adam scott triano joining us live on the phone from san francisco. Apple betting big on beats. That is one of the big stories today. Big thanks to our man in san francisco. Mario draghi says the euro is a cause for serious concern. Is that enough for a new rate cut next month . We will explain when we go inside luxury skincare company. Welcome back. Some breaking numbers from french equipment maker. The company has announced a loss of the First Quarter. The loss was 73 Million Euros. Revenue little changed, 2. 9 6 billion. The gross profit margin, the percentage of sales was 32. 3 . This is a company that is cutting costs amid sputtering demand. Nude executives have taken over in the last year and the plan is to cut expense new executives have taken over in the last year and the plan is to cut expenses. It is a massively changing industry that is very competitive. Focusing almost exclusively on network equipment. Erickson is expanding its Services Business as well. We will be speaking more about the earnings later in the show. I will be speaking with jewel abbey in the second hour of joel abbey in the second hour of countdown. Mario draghi has set the clock ticking for stimulus in june. Before we want to see the staff projections that will come out in early june. For more on the likely policy action, lets bring in chief economist. Always good to see you. What is on the cards in june . The ecb has set the stage for a rate move next month. Mario draghi was not specific about whether it will be a conventional policy easing that we will see. What is clear is that having expectations nonmarket will be difficult not to deliver a rate cut for fear of provoking unwanted euros strength. The way he downplayed the importance of the overnight market rate. It has become completely this anchored. Dis will we continue to see volatile money market rates . It is the case unless ecb comes up with more liquidity measures. Hostage thetes are volatility, which is not by the ecb design. He indicated that volatility means there are more players in the market. From a market perspective, the ecb rate cut next month to weaken the euro will have credibility it will be difficult without more ecb liquidity injections. The euro could weaken initially. How much can limited bases basis point really deliver . The drivers have very little to do with that ecb rates. Mario draghi admitted that himself this month. It is no match for the week u. S. Dollar trend. Janet yellens remarks pointed cpi inflation rising in the u. S. Versus any concerns that might be about the size of the balance sheet. We have to talk about chinas cpi. Two things we will be chatting about. Economist is here. Consumer inflation in china moderating. Prices, does it give the authorities are in to implement more room to implement measures to boost growth . Probably going to be a more balanced approach to the cost of the chinese economic rebalancing. A framework of inflation across the chinese economy, housing, retail, wholesale. That is one of the prices to pay with a bumpier gdp. It characterized the breakaway expansion of recent years. The important thing is that it feels concerns that the slowdown is less rather than more managed and the fears of tail risks of a bumpier harder landing have increased. They are quite agnostic and their approach to this because some inflation and growth volatility will be the price to pay. Lets spin it forward to next week. We had the rate meeting yesterday and nothing happened. Masked next week is exciting, thet it . A big debate about slack in the economy. There is the changing of personnel. Absolutely. Extremely exciting times at the moment because the u. K. Economy. S expanding at a pace of 3. 5 with the u. K. Unemployment rate in february, the markets focus is on the first bank of england rate hike. The main Inflation Report is important because it will stress test the markets assumption about the conditional tightening guidance of the bank of england has adopted under its new forward guidance. There are three things that will be instrumental in terms of shaping the markets understanding. Depending on the banks thoughts about Business Investment and the productivity growth. The second thing is how inflationary this environment is in the current environment and the reality is we have seen a much more rapid than expected u. K. Unemployment rate. There is some suspicion that this would be understating the capacity and overstating inflation. The third point, quickly. But this is a market that is one way direction. Yes, of course, the direction of policy is between steady rates and tightening rates. With the market it looks highly unlikely that any member will feel the need to put even more tightening. Good to chat to you. We will get numbers from telefonica. Welcome back. Lets go over to jonathan ferro. There is only one current thing that we can look at right now and it is the euro. Check it out yesterday. Although the action happening at the ecb press conference. At one point, the bets were on. We are comfortable acting in june, they used this meeting to preview the next one when the ecb releases their forecast. What will they do . June 5 is the day for your diary. Defended their independence. Deutsche bank says if he does not act, the credibility will be shattered. Will they deliver . What exactly are they going to do if they do deliver . Theyraines leaders say are ready for peaceful dialogue with representatives in the eastern region. A russian separatists in the east say they will push ahead onh autonomy referendums sunday. That a calls from Vladimir Putin to delay the vote. Despite calls from Vladimir Putin to delay the vote. 20 years after taking power under nelson mandela, the agency still enjoys strong backing among the black majority. Representatives of professional football european makes say any attempt to reschedule the world cup in 2022 would damage their season. Proposed moving the world cup to november or december to avoid qatar summer temperatures. Britainas Stores Across and has cemented its reputation of the purveyor of the finest cosmetics. Anna edwards spoke with the founder. The company and the early 1990s. The apothecary now operates 62 Stores Across the u. K. Lipsticks economics of just suggest consumers still buy pricey makeup in tough Economic Times. Quickly opened the doors in 1993. I think we have benefited from some of the money coming from fashion into makeup and beauty. The International Business includes 23 stores in the u. S. Alongside a growing online presence. Future aspirations they lie in the east. Us to internet has opened a global customer. I have aspirations that it would be fabulous to be open in southeast asia. Countries like japan and korea where there is such a heritage and people welcome skincare regimens. Her passion for the beauty world started in childhood and it is passion that she says makes the successful business. If you want to be an entrepreneur, you have to be passionate about what you are involved in. Anyone can be good at anything, if you feel passion, you will do the job so much better. What about getting outside money involved . You have to give up a little bit of control. It was always about more than having just money. It was other peoples expertise. You can always find money somewhere, but it is getting the right money and the rind mindset the right mindset. Lets continue the conversation. We are joined by another entrepreneur, the founder of the luxury fragrance company. Good morning. Perfumery is very much in your genes, isnt it . Your father was known as the perfume man. He started the business and together with my mother they founded what it is today. He heritages multilevel i see myself as a very true british brand and entrepreneur. The heritage goes back all the way to imperial britain, colonial britain, india, africa. Arabia. Into ancient those are my roots. It is trying on all of those routes and bringing it back to britain. He came back to the Family Business in 2009. What was your ambition . Was to revive the family roots and the traditional skills and the artisan of true perfumery. I went back to the traditional formulas my parents had created and looked into these and revive them again. That was not enough because i wanted to use those skills to create my own collection, which i did. That was always the ultimate goal. Give us an idea of what it takes. Takes a lot of passion and dedication and a lot of patience. Where do i get the patients from . Ce from. N it is a labor of love and i have always had it in my blood. To see others enjoying it and really taking the pleasure, that is where the satisfaction comes from. I like to see that. You have this passion and anna was talking about that. Where did the business acumen come from . Was having been in the industry for such a long time, it was not just about the business, yes, it is nice to have a healthy business. Andme, it was the passion the skill that Great Britain has always been known for. For me to contribute towards. Hat was very important to see britain as a thriving economy. I had to get all my resources back into the u. K. And support manufacturers. The perfumes are handmade in the u. K. Everything is handmade and im proud to say made in england. How do you gain recognition . How do you attain Brand Awareness . A lot of it is through word of mouth and previously through what my parents had developed in the relationship with the clients. They have continued to follow and to seek the same quality of products and having seen that i have taken over, the Second Generation has created quite a clients, their children and grandchildren are following in a luxury market. A lot of it is to do with wordofmouth and interacting with a like organization. Theow do you compete with multitude of celebrity perfumes that are out there and be the big player . How do you compete with those factors . I do not feel it is a big challenge. Celebrity perfumes are celebrity perfumes. A targeted different clientele. Create for the niche market. We create people who really want to we create for people who really want to enjoy perfumes. They can wear it for years to come and it becomes an heirloom. To wait for ance perfume to be created. You can create your own perfume. Of 1. 5 yearsnimum to get your perfume made because the process is lengthy. We select each ingredient. A series of consultations before we get to the final. How would you create a perfume for this show . It would have to be something quite fresh. Good answer. It would have to be fresh, relaxing, uplifting. It is important to look at the lifestyle of the individual client. Fresh, relaxing, uplifting, you have some it up. Good luck to you. They are almost recession proof. Have you fared well in a difficult Economic Times . Thats absolutely. Absolutely. We are launching a new collection next week. Good luck to you. Come back and tell us how you do. Just getting some earnings from telefonica. Europes second biggest phone company. Operating income leaving out appreciation, and First Quarter was 3. 93 billion.