Markets & Finance

Aegon Higher on Takeover Talk


From Standard & Poor's European MarketScope

France

Arcelor gained €0.23 to €18.93 Tuesday. The company is reportedly interested in acquiring a 50% stake in China's Laiwu Steel, according to the daily Chinese Business News. The paper says the company is fighting against a resolution by the Chinese government that foreign groups should not hold a controlling stake on steelmakers.

Gemplus gained €0.05 to €2.35. The company's CEO, Alex Mandl, said in Singapore that the company is looking for acquisitions as a way to increase its market share in the sector, saying consolidation is certainly a possibility.

Thales fell €0.39 to €37.91. The company remained in focus Tuesday as it announced on Monday it plans to sue French daily Le Monde after it reported the company has paid extensive bribes to secure contracts.

Sr. Teleperformance gained €1.44 to €25.94. The company issued first half net attributable profit of €23.3 million, up 54%; with revenues of €570.9 million, up 29%. Its operating margin was 8.3%. The company also lifted its its fiscal 2005 guidance, and now expects revenue up 23% to €1.17 billion, with operating profit up 30% to €100 million and attributable net profit up 34% to €55 million. Fortis Bank lifted its target by 9% to €29 and maintains its buy rating. ETC Pollak Prebon raised its target to €27.5 from €25.5 and keeps its buy rating.

LVMH fell €0.55 to €68.05. The company is to launch an Internet selling service which will deliver goods within two days anywhere in France from Oct. 12, according to a report in French daily Le Figaro. The company is also opening a store in Paris' Champs Elysees. SocGen lifted its fair value by 6% to €72 and keeps its hold rating.

Germany

Porsche gained €22.35 to €629.77. The automaker expects a double-digit return on its VW investment and says it will talk with VW over buying some or all of its treasury shares. The company still holds less than 5% of VW's shares. As reported by FTD, the company is seeking three seats on VW's supervisory board. On the broker front, Deutsche upgraded Porsche to hold from sell, lifting its target to €620 from €550.

VW fell €0.03 to €51.52. The company has confirmed its Golf SUV will be built in Wolfsburg after the German works council agreed to make production at the site more competitive. Meanwhile, the FT reports that the company is considering issuing new shares as part of its efforts to help Porsche to increase its stake.

DaimlerChrysler gained €0.04 to €43.76. The company's 37%-owned Japanese partner Mitsubishi reportedly said U.S. sales will rise in September on the back of its redesigned Eclipse car for the second month in a row, which follows two years of decline.

Siemens fell €0.74 to €62.90. The company is still doing due diligence on VA Technologie and says will make provisions of about €70m for the Elin subsidiary.

Italy

Capitalia gained €0.15 to €4.50 after Citigroup initiated coverage on the shares with a buy rating and a €5.20 target. ABN Amro, which holds a 9% stake in the company, will remain a loyal ally of the company until the latter's pact expires in October, 2006. In the meantime, the company's management is said to be sounding out whether pact members would be willing to increase their stakes in the company in the face of a merger between Capitalia, Fineco and MCC. The pact shareholding will slip to 27% from 31.45%.

Autogrill fell €0.20 to €12.02. Edizione Holding does not plan to sell shares in the company, nor does it intend to delist the group. According to press reports, the company is negotiating a €1 billion loan to fund an extraordinary deal. The company is said to be interested in buying Compass's restaurant service operations. There has also been talk that holding company Edizione Holding has been studying whether to sell the group to a private equity fund. Oddo Securities raised its target to €11.5 from €11, rates reduce, after trading update and confirmation of fiscal 05 guidance.

Bulgari fell €0.31 to €9.41. SocGen trimmed its fair value on the stock to €10.0 from €10.3, and keeps its hold opinion. The broker says although the company did not revise 2005 guidance, SocGen has downgraded its forecasts following the release of disappointing second quarter results. IXIS trimmed its target to €10.2 from €11.0, and reiterates its reduce rating.

Netherlands

Aegon gained €0.24 to €11.99 on market rumors of a possible takeover from either ING or Fortis. Sources tell Standard & Poor's European MarketScope that although a takeover by Fortis would be more logical - as the company is likely to be too big to be bought by ING - both rumors are highly unlikely.

KPN fell €0.02 to €7.39. Morgan Stanley trimmed its target on the shares to €8.3 from €8.5. Despite a strong performance recently, the broker says the company still offers around 12% upside potential to the new target and estimates that the stock trades at discounts to the industry of 42% on 2006 free cash flow yield and 13% on 2006 p-e, with a 38% higher dividend yield (5.9%). The broker maintains its positive stance on the stock but says the company is not the top pick at current levels. It remains overweight on the shares.

Royal Dutch Shell (NL) was €0.28 to €27.28 after JP Morgan upgraded the shares to overweight from neutral as part of a sector review. JPM lifted its forecasts to reflect changes to its macroeconomic assumptions, re-benchmarked relative valuations and updated price targets for the companies in its universe. The broker keeps its buy recommendation.

Getronics gained €0.13 to €10.14. The company announced that the chairman of the board of directors, Klaas Wagenaar, is willing to retain his position for a further four years, on condition that his appointment is approved by the shareholders during the next shareholders' meeting. Separately, Fortis reportedly upgraded the stock to buy from hold.

Nordic

Lindex fell SEK5.50 to SEK407.50. The company reported fourth quarter pretax profit at SEK114 million, vs. the forecast of SEK86 million in a Reuters poll. Fourth quarter sales were SEK1.341 billion, beating expectations of SEK1.317 billion. The company proposed a 6-for-1 share split combined with a compulsory redemption procedure. Each redemption share will be redeemed for SEK40. No dividend was given; analysts had expected a dividend at SEK40 per share, vs. SEK15 in the 2004 fourth quarter. Handelsbanken saw SEK50.

Nordea gained SEK0.50 to SEK75.75 after being highlighted in a piece in Dagens Industri as one of the most attractive investments on the Stockholm exchange. The daily says increased activity in Swedish trade and business signals strong third quarter reports from the banking sector, and the company is pointed out as an investor favorite. Others mentioned are S-E Banken, Foreningssparbanken, and Handelsbanken.

Skanska gained SEK4.00 to SEK113.00. At the company's presentation before analysts Tuesday, Carnegie expects CEO Stuart Graham to continue with a relatively positive message of short-term focus on the improving U.S. market and the strong balance sheet. The broker reiterates its outperform with a sum-of-the-parts valuation of SEK130 per share. Separately, the company won a contract to build a post office terminal in the Czech Republic for SEK366 million.

Carlsberg gained DKK6.00 to DKK358.50. The company plans to close half of its breweries in Europe, reports the daily Boersen. In order to increase profitability in western Europe, the company will close 14 breweries, CEO Nils Smedegaard Andersen told the daily.

Switzerland

UBS fell CHF0.10 to CHF110.40. The company is investing US$500 million in a deal with Bank of China to develop investment banking and securities services in that country. Zuercher Kantonalbank thinks the combination of the two parties makes sense.

CS Group gained CHF0.05 to CHF57.65. China Construction Bank was planning to sell a US$500 million stake to the company. However, because the company is also underwriting the Chinese bank's IPO, the sale is being scrapped to avoid the delays associated with regulatory approval. This is according to sources familiar with the situation.

United Kingdom

O2 gained £0.04 to £1.57. The company says first half momentum was stronger than expected, and net service revenue growth in its UK business for the full year is now expected to be in the 6%-9% range, compared with previous guidance for growth in mid-single digits. It says EBITDA margin for the fiscal year is still expected to be broadly stable on a like-for-like basis.

Royal Dutch Shell (UK) gained £0.32 to £19.44. JP Morgan upgraded the company and BP to buy from neutral, but downgraded Total. The broker has raised forecasts to reflect changes to its macroeconomic assumptions, re-benchmarked relative valuations and updated price targets for the companies in its universe.

Pilkington fell £0.04 to £1.40. The company sees first half pretax profit up more than 20% over the same period last year, taking into account the timing of strong first half licensing and engineering receipts.

Mitchells & Butlers fell £0.07 to £3.64. The company reports same outlet like-for-like sales up 4.7% in the 19 weeks to Sept. 17. However, it says the July terrorist attacks in London are having a significant impact on its Central London estate: in the 11 weeks since the attacks, same outlet sales growth in Central London was 2.2% compared with the 7.6% growth trend for the 40 weeks prior to the attacks. Still, it says amid challenging trading conditions, it has continued to achieve market share gains. Merrill Lynch downgraded the stock to neutral from buy.


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