Markets & Finance

On the Move: Alcatel, BP, GSK


From Standard & Poor's European MarketScope

France

ALCATEL (ALA) was down €0.22 to €10.38. The company is considering a £5 billion bid for Thales, The Sunday Times reported. Citing City sources, the newspaper said the company is considering the move as a defense against tough international telecoms markets, and to take advantage of French political wrangling over the future of Thales, in which the French government has a 31% stake. The company's future has been uncertain since it was put in play by a thinly veiled takeover attempt last year by EADS.

THALES was up €1.28 to €38.06 on news of possible interest from Alcatel.

SUEZ (SZE)was up €0.31 to €23.92. Suez group company Electrabel is planning to build three power plants in the Netherlands, two of them gas-fired CCGT thermal power stations, while the other one will be a coal-fired and biomass power station.

EADS was up €0.14 to €30.22. The company has reportedly won an order worth US$2.6 billion for 17 new Airbus planes from airline TAP Portugal. Earlier this morning at the Dubai Air Show, the company confirmed that India's Kingfisher Airline has placed an order worth around US$2 billion for 30 extra A320 planes. The company also won a US$2.9 billion contract during the weekend from Kuwait's Aviation Lease and Al-Jazeera Airways. Meanwhile, analysts reported that the stock could be down on fears the company will compete against Alcatel in a bidding war for Thales.

Spain

REPSOL YPF was up €0.68 to €25.58. The company made gains as Evo Morales, activist and front-runner in Bolivia's presidential race, said he will not confiscate gas company assets if he wins office. Morales said new contracts signed under a gas nationalization program would respect the interests of private companies as well as the government. Meanwhile, crude oil prices rose amid expectations of a cold snap in the Northern hemisphere.

GAMESA was up €0.47 to €12.45. The company announced that it has signed a contract with US group Horizon Wind to supply up to 600 Megawatts of capacity. Of this, 400 MW will be supplied initially with an option for a further 200 MW. The company said the final value of the contract could reach US$700 million.

United Kingdom

GLAXOSMITHKLINE (GSK) was down £0.58 to £14.39. The FDA has proposed tough new restrictions on the company 's biggest-selling asthma drug, The Sunday Times wrote. The agency said that Advair, known as Seretide in the UK, should be given only to patients who have failed to respond to other treatments. CSFB downgraded the stock to neutral from outperform and lowered its target price to £14.40 from £15.75 on the news.

BP (BP) was up £0.09 to £6.54. The WTI traded just below the US$58 mark on forecasts of a cold snap in the Northern hemisphere. Evo Morales, activist and front-runner in Bolivia's presidential race, said he will not confiscate gas company assets if he wins office.

LONDON STOCK EXCHANGE was up £0.01 to £6.02. WSJ reported that Euronext is considering a stock-swap merger with the company, citing sources. The paper said Euronext would create a new company in which shareholders of both groups would swap their shares for stock in the new company, a move which would assuage Euronext shareholders who oppose a cash bid. Euronext would be likely to own the bulk of the new company.

Italy

UNICREDIT was up €0.07 to €5.34. Merrill reinstated coverage with a buy rating and €5.7 target price.

Netherlands

REED ELSEVIER NV was down €0.21 to €11.14. The company continues to be hi by the weak education outlook. The CEO said late Friday that it would take until 2007 for a component of its education business to recover. He added that the company's educational supplements were hit by a downturn in the broader market because of rising fuel costs that have restrained consumer spending. He added that the company, also got caught with the wrong product line under new US education standards.

VNU was up €0.05 to €27.16. Anglo-American private equity groups could launch a £5 billion-plus bid for the company, the British newspaper The Observer reported over the weekend. Apax and Cinven are understood to be the most likely buyers of the company. Separately, ING raised its price target on the company to €27 from €25, and kept its hold recommendation.

Germany

E.ON (EON) was up €1.40 to €78.50. The company's Hanse division said it will raise retail gas prices by 0.51 cents (10%)per kilowatt hour (kWh) to 5.54 cents (gross) from the beginning of next year.

INFINEON was down €0.08 to €7.92. Der Spiegel reported that the company could face further fines in relation to price fixing in memory chips. The company paid a US$160 million fine in relation to the case in the US in October last year, but the EU Commission is examining whether European consumers were also affected, potentially opening the door to further fines.

LINDE was up €0.78 to €61.97. The company secured its largest individual order ever for air separation plants, in Saudi Arabia. The two production facilities for pure oxygen are being commissioned by National Industrial Gas Company (NIGC), the largest industrial gases company in the Middle East.

MUNICH RE was up €1.65 to €109.24. The company issued a €110 million catastrophe bond to help cover losses in case of future global warming related windstorms in western Europe. Based on a wind-speed trigger and with a term from 18 November 2005 to 31 March 2009, the product covers almost four full windstorm seasons. The bonds, called Aiolos after the Greek god of the winds, are rated BB+ (the standard rating for catastrophe bonds) by Standard & Poor's.

DAIMLERCHRYSLER (DCX) was up €0.83 to €44.08. The carmaker is in talks to restructure its cancelled Smart roadster under another badge, the (FT) reported. Separately, Automobilwoche reported that the company is in talks with Bremer Immobilien-Holding Zechbau and a Nordic bidder about selling its investment unit, DaimlerChrysler Structured Finance.

Nordics

NESTE OIL was up €1.63 to €25.18. Merrill Lynch added the company to its Europe 1 list and kept its buy recommendation and € 32 price target. Last week Morgan Stanley upgraded the company to equal weight from underweight and lifted its target price to €27 from €25. Prepared by Zaida Espana, Valerie Vidal, Michael Sanderson, Mariella Mongio, Alexander Wisch, Holly Cook, Emma Stevenson, Pawan Girglani, Julien Manrique, and Rocio Opazo-Aniotz (Standard & Poor's); Alex Halperin (BusinessWeek Online)


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