Markets & Finance

Total Rises on New Credit Rating


From Standard & Poor's European MarketScope

France

Oil group Total was up €5.30 to €213.10 after Moody's Investors Service raised the credit rating on the company's long-term debt by one notch to Aa1 from Aa2 thanks to the company's lower costs compared to competitors. Separately, the sector received another boost from crude oil prices, as benchmark oil futures crossed the $70 per barrel mark again because of severe damage from hurricane Katrina in the Gulf of Mexico. Lastly, the company announced the launch of the Moho-Bilondo project in Congo, with a production capacity of 90,000 barrels per day starting in 2008, doubling the company's production in the African country. Italian oil-services group Saipem was also up €0.29 to €13.56, as domestic sources believe the company could be involved in some parts of the Total project.

L'Oreal was up €0.95 to €65.05 after the company announced that it has acquired Sara Lee's Delial sun-cream business. Delial, which generates about €20 million yearly, is one of the three best-selling sun products in Spain.

France Telecom was down €0.36 to €24.41 after the company announced plans to sell133.44 million shares worth around €3 billion to finance its takeover over the stake of Spanish mobile phone group Amena that it does not yet own. The shares will sell at €24.60 each. The telecom acquired 80% of Amena in July for €6.4 billion. Trading in the stock was suspended temporarily this morning.

Drugmaker Sanofit-Aventis was down €0.70 to €69.20 after the company raised its fiscal-year earnings per share growth target to at least 20% as it posted first half net profit of €1.1 billion. Its adjusted net income came in at €2.97 million, up 27.1%, and net sales were €13.1 billion, up 11%. Following the results, the bank Fideuram upgraded the company to "buy."

Foodmaker Danone was up €1.70 to €84.10 after JP Morgan increased its target to €95 from €85 and reiterated its "overweight" rating, saying that the company has regained its premium to the sector and should be able to maintain it. The broker noted that the food group remains a potential take-over candidate and is unlikely to be protected by law in France despite press reports. Meanwhile, the U.K. Conservative party leader David Willets said that France's move to shield strategic industries from takeover is stupid, the Financial Times reported. The daily noted that the French government reassured that it would act within an European Union framework, including the definition of what "strategic interests."

Britain

Miner BHP Billiton was up £0.08 to £8.25 after Morgan Stanley increased its target by13% to £9.30.

Insurer Old Mutual was up £0.03 to £1.41 as Swedish insurer Skandia's investors are split over the company's approach. The Financial Times said that the positive comments from shareholders may push the company to make "selective modifications." Also, the paper suggests that a 5% to 10% bid sweetener, or a higher ratio of cash component, could seal the deal. One of Skandia's largest investors, Fjarde AP-Fonden, said "no" to a deal with Old Mutual, reported the daily Dagens Nyheter. According to the newspaper, eight of the eleven board members are against the bid. The newspaper Dagens Industri wrote that another investor, Cevian Capital, supports an acquisition of Skandia. Meanwhile, Citigroup increased its target to £1.36 from £1.34, and retained its "hold."

Germany

Volkswagen was up €0.42 to €42.75 after the carmaker threatened its unions that it could move production of its compact sports utility vehicle to Portugal, with costs lower there than in Germany.

BMW was up €0.46 to €36.42 after CEO Helmut Panke reportedly expects group vehicle sales to rise by some 9 to 9.5% in August.

Netherlands

ABN Amro was up €0.30 to €19.44 after Italian bank Banca Populare Italiana has reportedly agreed to the Dutch bank's offer of €26.50 per share for its 29% stake in Italian peer Banca Antonveneta. Sources disclosed that Populare Italiana has agreed to the sale on condition that it can purchase the merchant bank Interbanca and retain around 100 branches (out of 1004). Yesterday, Populare Italiana's advisors, Dresdner Kleinwort Wasserstein and Lazard, and ABN Amro's advisors, Rothschild and Lehman Brothers, met in London yesterday to discuss the possible sale of Populare Italiana's stake in Italian bank Banca Antonveneta to ABN Amro, the newspaper Finanza & Mercati wrote. Banca Populare Italiana was up €0.18 to €7.94 on the news.

Switzlerland

Food giant Nestle was up 6.75 Swiss francs to 352.00 francs, after the Financial Times highlighted the company as one of the several food and beverage players reacting efficiently to changes in consumer attitudes towards healthier lifestyles. Specifically, the newspaper notes that the company has been cutting back on fat and salt in its products.


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