Markets & Finance

European Movers: SAP, Business Objects, Northern Rock


Plus more European stocks making headlines Monday

UK

KAZAKHMYS was down £0.94 to £15.02... Flooding hits copper cathode output - the company says copper cathode production from own ore in 2007 is expected to be moderately below the level of 2006 following flooding at the South Mine in the Zhezkazgan complex. Adds a full third quarter production report will be released on 24 October.

NORTHERN ROCK was up £0.14 to £1.72... Looks at staying independent - the company management is considering whether the bank can be kept as an independent entity by using funding of up to £10 billion from Citigroup, the FT writes. Citigroup, which was retained last week as adviser, along with Merrill Lynch, is discussing additional financing to potential bidders, the paper writes. Apollo Management LP and Blackstone Group LP have individually expressed an interest in the company , according to people close to the matter, The WSJ writes.

France

BUSINESS OBJECTS (BOBJ) was up €6.07 to €41.07... SAP agrees to buy the company /Exane downgrades - Germany's SAP agrees to buy the company for €4.8 billion in cash, or €42 per share. Exane BNP Paribas downgrades to underperform from neutral. the company shares will start trading at 10.00 am GMT, Euronext says.

THOMSON (TMS) was up €0.48 to €11.29... Cheuvreux upgrades to outperform from underperform on a better momentum: 1) reassuring message on Grass Valley and the DVD business; 2) the core business continues to generate cash; and 3) visibility on earnings is better, as broker believes the transformation of the company is largely behind us. Raises EPS estimates by 12% in fiscal 2008 (€0.95) and by 11% in fiscal 2009 (€1.10). €12.5 target. the company raised €150 million in long-term private debt placements.

ALSTOM was up €3.57 to €152.77... Bouygues raises its stake/Shortlisted in Algeria - Bouygues increased its stake in the company to 30.07% from 25.35%. Repeats it has no plan to bid for the company in 2007 but says it may increase its stake further. Refuses to comment on a potential bid in 2008. the company has been shortlisted to build two power stations for Sonelgaz in Algeria. GE has also been shortlisted.

Germany

SAP (SAP) was down €1.68 to €39.95... Weighed down by agreed Business Objects deal - the company has agreed to buy Business Objects for €4.8 billion in cash, or €42 per share. The boards of the two companies voted to agree to the deal yesterday. It is expected to close in first quarter08. Due to acquisition related effects, the company expects the deal to be EPS dilutive by a mid-single-digit EUR-cents amount in 2008 on a US GAAP basis. The brokers generally find the deal expensive. For comments, see Broker Views & News - Germany. Exane downgrades to neutral from outperform, with the target at €44.00. Sal Oppenheim downgrades to neutral from buy.

AIR BERLIN was up €0.73 to €13.22... September passenger count up 21% year-over-year - including traffic at recently bought charter airline LTU. The load factor for last month was 2.4 percentage points higher year-over-year at 83.6%.

Italy

ATLANTIA was up €0.45 to €25.57... The brokers raise target after govt deal - Cheuvreux raises target to €26 from € 24, reiterates underperform. The company says agreement with Italian govt has reduced regulatory risk. Believes the merger with Abertis could become viable again. Merrill Lynch lifts target to €29 from €28, reiterates buy. Notes late on Friday, the company announced an agreement with the govt settling all regulatory and legal disputes. The agreement is referred to as the single concession contract scheme and still requires the approval of a number of levels of govt including CIPE and the ministries of infrastructure and finance. The company's board has agreed to pay shareholders an interim 2007 dividend of €0.31 on 22 November. The dividend corresponds to half of fiscal 2006's full dividend.

Netherlands

AKZO NOBEL (AKZOY) was up €0.05 to €60.00... Strategy updates, plans to increase dividend - At its analyst meeting in London, the company announces plans to increase its interim dividend to €0.40 per share from €0.30. Adds the company should be able to outgrow markets and deliver EBITDA margins in the upper half of its peer group. The company says €2 billion share buyback planned to start in the second half of next year. In addition, a return of paid-in capital of € 1 billion is scheduled upon completion of the share buyback. ICI integration estimated to result in a total post-tax net present value benefit of approximately €2.5 billion after implementation costs.

Nordics

CARNEGIE was down SEK5.00 to SEK139.00... Deutsche Bank downgrades to sell vs hold and cuts target to SEK134 vs SEK139. Broker says it has held on to the company waiting for a rebound and take-over speculations to begin. As the shares have jumped 25%, broker now asks who will buy and at what price. The broker argues the usual suspects; the Icelandic banks, do not have the money and the Nordic suspects, DnB NOR and Swedbank are not that keen.

TELE2 was up SEK2.25 to SEK139.25... SEK3.5 billion impairment loss in third quarter - the company will report impairment loss from goodwill and other assets of c.SEK 3.5 billion in third quarter. The company says the loss will have no impact on its cash flow. Meanwhile, the third quarter EBIT will include net positive one-off items of c.SEK1.4 billion related to divestments of operations in Denmark, Irkutsk (Russia), Portugal and the company 3C. separately, Vodafone will to acquire Tele2 Italy and Tele2 Spain from the company at £537 million in cash on a debt free basis.

Spain

SANTANDER (STD) was down €0.08 to €13.86... To raise capital to fund ABN purchase - The RBS-led consortium says the minimum acceptance condition of the offer for ABN Amro has been satisfied. Adds the acceptances represent about 86% of ABN Amro ordinary shares. Consortium expects to make an announcement on whether or not the offer will be declared unconditional on or before 12 October. the company will increase its capital by between € 2.7 billion-€4 billion to fund acquisition of ABN Amro, according to the newspaper ABC. The increase is expected by November or December.

GAMESA was up €0.27 to €29.68... Shares continue recent rally - the company's shares continue to gain after last week's positive comments from Morgan Stanley and Deutsche Bank. In addition, Iberdrola bought a further 0.25% of the company last week, taking its stake to 18.25%.

IBERDROLA Unchanged at €10.51... Stock split effective - Four for one stock split takes place today. Lehman Brothers cuts target to €10 from €10.75 (adjusted for split). Sees less likelihood of M&A before the Spanish elections, and removes the premium.

VUELING was up €1.12 to €11.24... SocGen buys 1.37% stake from Gaesco Bolsa - Local media reports that Societe Generale has bought from Gaesco Bolsa a 1.37% stake in the company at an average price of €10.10/sh. The stake corresponds to 204,943 shares for a total value of € 2.07 million.

Switzerland

UBS (UBS) was up CHF0.15 to CHF68.10... Merrill upgrades recommendation to buy - Merrill Lynch upgrades to buy from neutral as it thinks the company has the least exposure to worrying areas (fixed income) and the most exposure to high ROE businesses (private banking/asset management). Also believes that UBS management is under the most pressure to deliver. Separately, the company is not mulling the spin-off of investment banking, Chairman Marcel Ospel told Finanz & Wirtschaft.

CS GROUP (CS) was down CHF0.20 to CHF81.65... Merrill Lynch downgrades to neutral from buy. The broker remains cautious on the 2008 outlook for investment banks. More specifically, thinks fixed income businesses, particularly leveraged finance, RMBS, and CMBS, will struggle to reach historical levels of profitability. In other broker changes, Deutsche Bank cuts target price to CHF90 from CHF94.


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