Markets & Finance

Puma Rises on Bid Rumor


From Standard & Poor's European MarketScope

Germany

Sporting goods maker Puma was up €4.51 to €215.90 after an article in the newspaper Handelsblatt said U.S. giant Nike could be interested in the company. The scenario is not new.

DaimlerChrysler was up €0.42 to €42.77, as the company and General Motors have struck a deal to co-develop new hybrid vehicle technology.

Broadcaster ProSiebenSat.1 was up €0.15 to €14.55 after posting second-quarter sales of €507.8 million and quarterly earnings before interest, taxes, depreciation and amortization of €126.6 million, better than expected. It reiterated its objective to outperform the German television advertising market, which it sees shrinking by about 2% this year. In another development, the Springer deal may be complicated by opposition, said the Wall Street Journal.

Italy

Carmaker Fiat was down €0.12 to €7.25, after the company's unit Iveco is filing a lawsuit against its Chinese joint-venture partner Changzhou Changjiang Bus Group (CBC) for embezzlement of more than €12 million, the newspaper La Republica wrote, adding that Iveco has stopped the production.

France

Advertising group Publicis was up €0.42 to €26.92 after the brokerage Cheuvreux added it to its selected list with a €31 target price. The broker expects growth of at least 6% for fiscal 2005, and sees 2006 to come in stronger, saying its 5.3% organic growth assumption seems now relatively conservative. Separately, good guidance from UK peer WPP lifted sentiment in sector this morning. The British firm brought forward headline operating margin targets of 13.7% under International Financial Reporting Standards one year to 2006, as it posted strong first-half interim results.

Air France-KLM was up €0.15 to €13.40, as it emerged that France will issue an airline "black list" as of next Monday on mounting concern over safety in the civil aviation sector, which will come into effect by early fiscal 2006. Brussels is also expected to draft a "black list" of airlines by October. The list could include not only unsafe airlines, but also bankrupt groups or unreliable airline carriers. The plan could force travel agencies to inform users of the airlines they use by fiscal 2006.

Miner Eramet was up €4.80 to €93.45, as the company denied a report that it is in acquisition talks with Brazil's Companhia Vale do Rio Doce (CVRD), the world's largest iron ore firm. The Wall Street Journal reported this morning that talks were underway for a deal which could be valued at more than €2 billion. According to the paper, the French state also holds a 28% stake in the company.

Netherlands

Financial services group Fortis was down €0.30 to €23.23, even as brokers lifted their targets following the group's results. The brokerage Cheuvreux increased its target to €24.0 from €23.6, and kept its underperform rating. Societe Generale raised its fiscal 2005 earnings per share forecast by 9% to reflect good results, and kept its fair value target of €25.50 and "buy" rating. Lehman Brothers increased its target to €22.5 from €21.0 and reiterated its "underweight" rating.

Britain

Business services and pest control group Rentokil Initial was down £0.03 to £1.59. Dresdner Kleinwort Wasserstein downgraded its earnings forecasts by 11% for 2005 and 8% for 2006, on the higher central cost line. The broker rates the company "sell." Credit Suisse First Boston downgraded the company to "neutral" from "outperform" and cut its target price to £1.70. Deutsche Bank cut its target to £1.59 from £1.65, and kept its "hold" rating, arguing that there is no visibility on the execution of the turnaround plan. Meanwhile, Lehman Brothers raised its target to £1.40 from £1.25, and kept its "underweight" rating. Separately, the Times reported that the company's management is to meet Sir Gerry Robinson to discuss his intentions towards the company.

Hilton hotel and betting group was up £0.07 to £3.11 after UBS raised its target to £3.55 from £3.40, and reiterated its "buy" rating. Goldman Sachs adjusted its fiscal-year forecasts to reflect a better-than-expected result from betting, the acquisition of the Jack Brown Welsh betting group, weak profitability levels in U.K. hotels and a lower weighted-average interest rate. The broker said that the net impact of these changes is a modest increase in underlying pre-tax profit of around 2% to £420.8 million. It kept its "outperform" rating with a fair value estimate of £3.55.

Switzerland

Electrical components maker Saia Burgess was up 85.00 Swiss francs to 1071.00 after Hong Kong's Johnson Electric made a 1060 francs per share white-knight bid, the company announced in press conference today. Earlier this month, Saia Burgess rejected a 950 francs per share offer from Japan-based Sumida. The company is recommending that shareholders accept Johnson Electric's offer. Trading of the company's shares have been suspended until 1 p.m. Swiss time.

Reinsurer Swiss Re was up 3.45 Swiss francs to 83.25 francs after Deutsche Bank upgraded the company to "buy" from "hold" and kept its 93 francs price target. The broker said that the company has structurally underperformed the insurance sector over the last three years, driven by a number of different "fear factors," including fears over uncontrolled growth. But the broker believes the last of these are about to evaporate.


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