Markets & Finance

On the Move: Imperial Tobacco, Thomson, E.on


Plus: Nokia, Telefonica, and other European stocks making headlines Friday

From Standard & Poor's European MarketScope

London

IMPERIAL TOBACCO was up £1.10 to £23.32. Following the company 's approach to Altadis, sources note the company could itself become a target. Both Cheuvreux and Lehman mention the possibility that Altria could come in and bid for the company , perhaps with Altadis' support, but equally both say this seems unlikely. The Independent writes that private equity firm KKR has been mentioned as interested in Altadis, and could make a counterbid. The company made its approach to Altadis public because it feared BAT was preparing a bid for the Spanish tobacco group at €46/share, writes El Confidencial.com. US fund management group Franklin Mutual Advisors LLC, which owns an 8% stake in Altadis, said it supports the company 's €45/share bid, writes Expansion.

WOLSELEY was down £0.22 to £12.00. Ahead of Monday's interim results, Seymour Pierce expects to see a 10% increase in revenue to £6781 million, operating profits to be down by 3.6% at £358 million and pretax profit to be down by 12.3 % at £328 million. Forecasts an 11.3% fall in EPS to 38.98p. Notes second half should be stronger for the company and any fall in share price on the interims is a buying opportunity. Notes US housing starts for February are due on Tuesday and broker expects a drop of 22% on the annualized rate of housing starts to 1.655 million. Retains buy.

Paris

THOMSON (TMS) was up €0.59 to €14.17. Merrill Lynch upgrades to buy from neutral with €16 target, implying 17% upside potential. With the company almost fully out of these legacy businesses and management now de-emphasizing acquisitions, broker thinks shareholders may finally start to benefit from the sustained cash generation of the Core business.

SOC GEN was down €1.26 to €121.14. The company plans to sell US$215 million of bonds backed by Russian mortgages. The loans were made by DeltaCredit Bank, owned by the company

Frankfurt

REPOWER was up €2.38 to €151.00. India's Suzlon Energy may lift its offer for the company to about €160 per share, according to the Economic Times. This would value the company at US$1.7 billion. This follows French nuclear reactor maker Areva having raised its offer for the company by a third to €140 per share.

E.ON (EON) was up €0.86 to €99.84. Handelsblatt reports that the company has met with Acciona and offered to buy the Spanish construction group's 21% stake in power company Endesa. However, Spanish newspaper ABC reports that Acciona has rejected the company 's offer.

RHEINMETALL was up €2.25 to €61.98. Deutsche upgrades to buy from hold and lifts its price target to €73 from €54. The broker envisages strong years ahead, with the company 's outlook as promising as never before.

Nordic

NOKIA (NOK) was up €0.18 to €16.41... Siemens boosts contribution to phone j/v - Siemens boosted its net asset contribution to its phone network venture with the company by €300 million, according to Germany's Handelsblatt.

Spain

TELEFONICA (TEF) was up €0.18 to €15.72. Portugal Telecom (PT) has sufficient funds to buy the company 's 50% stake in their Brazilian mobile j/v Vivo, writes Expansion. Cheuvreux lifts target to €19.75 and keeps selected list. Sees the company 's growth (12% EPS CAGR 2006-09), free cash flow generation (€30 billion), potential buy back extension, and valuation appeal (11x P/E 07; 30% to TP) as key positives. Expects management to be M&A disciplined.

ALTADIS was down €1.65 to €43.75. Dresdner upgrades to hold from reduce and raises target to €45 from €36. SocGen raises target to €48 from €46, buy. Cheuvreux lifts target to €50, selected list. The Independent writes that private equity firm KKR has been mentioned as interested in the company , and could make a counterbid. Imperial Tobacco made its approach to the company public because it feared BAT was preparing a bid for the company at €46/share, writes El Confidencial.com. US fund management firm Franklin Mutual Advisers, which owns 8% of the company , says it supports yesterday's takeover approach made by Imperial Tobacco.


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