M&A action couldn't propel gains across Europe Monday
From Standard & Poor's European MarketScope
European indexes closed flat to lower Monday morning. Oil slid below US$60/bbl amid forecasts of warmer US weather and signs of OPEC keeping output steady. Wall Street opened lower despite trans-Atlantic M&A activity.
UK: The FTSE 100 closed below the gain line. However, M&A talk and miners - with the latter buoyant on strong commodity prices - limited losses. In M&A activity, Alliance Boots (+7.10%) shares were higher as the Board rejected the takeover approach by KKR and executive deputy chairman Stefano Pessina. ICI (+5.28%) jumped on hopes of a bid from Akzo Nobel after the Dutch group cancelled the IPO of Organon, deciding to sell the unit to US-based Schering-Plough for €11 billion.
Smith & Nephew (+2.76%) shares rose after the largest medical devices maker in Europe said it was buying Switzerland's Plus Orthopedics. Also, the world's biggest can maker, Rexam (+0.96%), sold its glass business for €660 million to Ireland's Ardagh Glass Group. In earnings, Bovis (-2.45%) built up a 13.7% rise in fiscal pretax profit, anticipating to double DPS between 2004 and 2008.
Interserve's (+5.51%) fiscal earnings beat estimates, rising 68% to £58.1 million. From the weekend press: Prudential (-1.24%) may this week unveil a deal to move thousands of jobs overseas in a bid to boost profits in its struggling UK business, The Daily Telegraph wrote.
France: The CAC 40 index (-0.62%) closed in the red, though it pared mid-session losses: Schering-Plough (SGP) excited the market after agreeing to buy Akzo Nobel's Organon BioSciences unit, but troubled lender New Century Financial reignited fears over subprime lending. Total (TOT) (-0.73%) and Societe Generale (-1.2%) weighed down the blue chip index by 15 points. Total was the biggest points loser, with oil sliding below US$60/bbl - it also reported that Norwegian sea exploration has been fruitless.
Carrefour (-0.47%) finished well off intra day highs - it has denied La Lettre de l'Expansion's report that CEO Jose Luis Duran and finance chief Eric Reiss may quit following last week's ousting of chairman Luc Vandevelde. Vallourec (-1.71%) also fell on reports that Morgan Stanley placed 500,000 shares. EDF (-0.58%) and GDF (+0.47%) will continue to operate their power grids, in a deal accepted by the EU, French finance minister Thierry Breton told Les Echos.
Elsewhere, Energies Nouvelles (+2.25%) posted fiscal 2006 EBITDA of €91.8 million, up 47.3% year-over-year, with net profit at €21.9 million, up 31.9% year-over-year. It saw fiscal 2007 EBITDA of at least €125 million, and fiscal 2008 EBITDA of at least €200 million. In broker news, Lehman Brothers downgraded EADS (-1.06%) to equal weight from overweight, cutting the target to €24 from €28. Morgan Stanley lifted its target on Accor (+0.36%) to €75 from €71, reiterating its overweight rating.
Germany: The Xetra-Dax index (-0.02%) ended flat. In the pharma and chemicals sector, Euro am Sonntag reported that Bayer's (BAY) (+2.49%) CropScience business had new product sales of some €1 billion last year, which lifted the stock further to top the index at the close. In the industrial gases market, Linde (-0.01%) presented its full set of 2006 figures, with the underlying operating performance regarded by analysts as positive. Linde is guiding for €3 billion EBITDA by 2010. Meanwhile, it is selling its BOC Edwards components unit to CCMP Capital for some €685 million.
Autos-wise, according to FAZ, VW (+0.78%) is paying its 94,000 employees a bonus of more than €2,200 each this year. Automobilwoche reported that BMW (+0.36%) plans to increase productivity by at least 5% this year. DCX (DCX) (+0.57%) is recalling some 478,000 cars in the US.
In the power sector, Italy's Il Sole 24 Ore reckoned that Enel (EN) was interested in increasing its stake in Endesa, which E.On (EON) (-0.65%) is trying to buy, to 29.9%, should Spain lift the 25% threshold for triggering takeover bids. ElConfidencial.com reported that E.On and Enel could make a pact to marginalize Acciona and force it to leave Endesa's shareholding structure.