Markets & Finance

Carrefour, Tesco Trade Stores


From Standard & Poor's European MarketScope

France

CARREFOUR rose €0.44 to €38.22 Friday. The company and Tesco announced an asset swap involving stores and operations in the Czech Republic, Slovakia and Taiwan, subject to the usual regulatory approvals. As part of the deal, 11 of the company's stores in the Czech Republic and 4 stores in Slovakia will be transferred to Tesco for a combined enterprise value of €189.4 million. In return, Carrefour will receive 6 of Tesco's stores and 2 sites in Taiwan, of an enterprise value of €132 million. Tesco says this is part of a strategic move to strengthen its businesses in Central Europe.

BNP-PARIBAS rose €0.65 to €63.25. The company's lease unit is to acquire Belgium's J. Van Breda, a specialist in small ticket vendor leases. J.Van Breda has a €233 million portfolio. Financial details of the deal remain undisclosed.

HAVAS gained €0.06 to €4.26. Vincent Bollore increased his stake in the UK's Aegis to 9%, but the businessman is unwilling to make further comments. Separately, the company's Arnold unit has won the contract for Hershey's chocolate brands, including Kit Kat, Hershey's and York. The financial details of the deal remain undisclosed.

ACCOR added €0.56 to €42.26 in morning trade as CapGem's CEO Pierre Danon is hotly tipped to replace Accor CEO Jean Marc Espalioux, according to a report in Le Figaro.

Germany

DAIMLERCHRYSLER was own €0.58 to €43.92 after an unnamed supervisory board member says the company rules out a stake in VW, nor is a crossholding planned. This follows a Focus magazine report citing supervisory board sources saying the company wants to buy a stake of around 20% in VW. Daimler does, however, say it is in talks with VW about co-operation in specific products. Meanwhile, Daimler's stock rallied in the US after the company said it has €50 billion in cash, credit lines and other sources to improve its debt ratings, up from €40 billion in three years. Furthermore, the company plans to accelerate sale of MTU to pay for Mercedes job cuts. On the broker front, ING increased its target to €51 from €46 as it sticks to buy.

SCHERING rose €0.67 to €52.65. The company says a benefit study on betaseron shows it reduces risk of developing clinically definite multiple sclerosis. The study shows 50% risk reduction in patients with newly emerging MS.

BAYER added €0.11 to €30.35. Six bidders have reportedly submitted final offers for the non-prescription drugs arm of UK retailer Boots. The company 's offer is said to be between £1.4 billion and £1.45 billion.

Italy

TERNA was down €0.04 to €2.15. The Italian government has approved the 2006 budget which includes a "tax on transmission networks" for major energy suppliers. The budget targets €800m for three years commencing 2006. This would affect the company and Snam Rete Gas.

Netherlands

VNU added €1.10 to €26.15. As the company has been mulling selling off a unit, buying back more stock and ditching its CEO in order to persuade shareholders to allow the IMS Health acquisition to go through, the Wall Street Journal notes this suggests some in the company are worried that the whole deal will fall through. The WSJ adds that, if that is the case, it would be better for the company to abandon the proposed purchase altogether.

TNT wasp €0.76 to €20.77. United Parcel Service could be considering bidding for the company, Die Welt writes. The German publication cites UPS's head of sales, Kurt Kuehn, as saying an offer for the company is a possibility as UPS steps up acquisitions in Europe. Separately, Deutsche Bank cut its target to €23.2 from €24.5, but maintains its buy recommendation.

AKZO NOBEL rose €0.50 to €36.28. ING notes that the CATIE study has highlighted a vast unmet need in the US$14 billion schizophrenia market, setting the stage for new products. The broker believes the company (rated buy), Solvay (also buy), and Lundbeck (hold) could be key beneficiaries.

BAM GROEP added €3.60 to €75.35. The company confirms it is in talks with AM NV over a possible public bid, which would see AM's activities divided. AM says the bid price would be a maximum of €10.15 per share. The company, in conjunction with a financial partner, will ultimately own AM Wonen, AM Grondbedrijf, and the holding company AM NV. It is expected that AM Development will be acquired by another financial party. No further details of the offers were released.

Nordic

HANDELSBANKEN gained SEK5.50 to SEK179.00. The company 's new management will be more likely to make changes within the group, reports daily Dagens Industri, highlighting the potential for a sale or restructuring of SPP, the company 's life insurance business. The report suggests that such a move could free up additional cash to increase the already substantial buyback mandate.

INTENTIA rose SEK1.80 to SEK22.70. Lawson Software posted a first quarter profit compared with a loss in the previous year, thanks to strong sales of its human resources and financial management software products. Revenue rose 6.3% in the quarter to US$87.9 million and net income was US$4.18 million or 40 cents a share.

S-E BANKEN rose SEK1.00 to SEK142.00. UBS raised its target to SEK170 from SEK160 and reiterated its buy rating. Separately, the company 's new CEO, Annika Falkengren, taking over in a month's time, has already started to work towards improving the company 's most difficult area, Germany. Separately, the CEO says that overall there is currently an enormous appetite to do business and she is bullish on the company 's future.

Spain

UNION FENOSA rose €0.50 to €27.39. Caixa Galicia has indicated that it has exceeded its 10% stake in the company, and now holds 10.335%. Fortis comments that the company 's shares are heating up in view of likely additional acquisitions on the part of savings banks after ACS' purchase. The broker thinks that the company 's speculative appeal is reduced after the acquisition of ACS, and keeps its reduce rating on the shares.

SOGECABLE added €0.60 to €32.40. Fortis notes that the content manager of the company's new Cuatro channel has said initial broadcasts are to start on Nov. 7.

METROVACESA fell €0.20 to €61.80. Kempen re-initiated coverage with a sell rating and €48.4 fair value.

Switzerland

LONZA added CHF2.65 to CHF76.90. Citigroup initiated coverage of the shares with a buy rating and a CHF100 price target. The broker says the company has successfully started commercial scale production of biopharmaceuticals. It notes the Biopharma contract manufacturing market is currently US$2 billion and is growing at 20%.

UBS rose CHF0.30 to CHF111.40. The company said divestment of the 55.6% stake in Motor Columbus, which controls Switzerland's largest power company Atel, will result in a pretax gain of approximately CHF350 million. The buyers are planning to merge Atel and MC.

United Kingdom

TESCO rose £0.02 to £3.09 after the company and Carrefour announce an asset swap involving stores and operations in the Czech Republic, Slovakia and Taiwan.

MAN GROUP gained £0.09 to £16.66.The company anticipates first half group pretax profit will be in line with market expectations. It says net management fee income will be up by over 20%, net performance fee income will be up strongly, while brokerage net income will be up over 15%. Man says fully diluted underlying EPS are expected to be up by about 20% and total per share by over 30%. It estimates second quarter sales at US$1.8 billion.

MARKS & SPENCER fell £0.02 to £3.75. The shares remain well bid following Thursday's late gains on speculation ex-WestLB chief Robin Saunders was working with management to take the company private at around £4.50. Separately, Goldman Sachs upgraded the shares to outperform from in-line on a fundamental approach, saying the company is its favorite UK apparel retailer. Goldman notes the company is focusing on improving margins in a tough UK consumer environment. CSFB also upgraded the stock to outperform from neutral, with a £4.00 price target.


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