Markets & Finance

European Movers: France Telecom, Conergy, UBS


Plus more European stocks making headlines Wednesday

UK

NORTHERN ROCK was down £0.05 to £1.00... Two contenders left: Virgin and Arnold The battle for the company has been whittled down two bidders, after Cerberus, the US private equity firm, dropped out of the running, The Times reports. Cites sources close to the company saying that only two bids were being seriously considered by the board and its advisers. Virgin Group remains the preferred bidder, but shareholders favor a proposal from a consortium led by Luqman Arnold.

XSTRATA was down £0.32 to £37.06... Confirms discussions with suitors the company says none of the very preliminary discussions have resulted in any proposal being made either for or by the company and there can be no certainty that any such proposal will result.

VODAFONE (VOD) was up £0.04 to £1.87... Goldman raises estimates 2008/09 Lifts EBITDA by 3.7% to £14.629 billion. UPS EPS forecast by 1.7% in 2007/08 to 12.78p; 3.1% in 2008/09 to 13.99p (about half of this rise due to currency) and 2.5% in 2009/10 to 14.94p. On a reported basis the new EPS numbers are 11.62p, 12.85p and 13.89p, respectively. Cuts ADR target to US$43.62 from US$43.84, retains buy.

France

AXA (AXA) was down €0.20 to €28.31... HSBC initiates with underperform and €32 target. Believes the company shares will under perform the sector near term should markets move sideways in light of relatively high adjusted beta and equity-sensitive SOTP valuation. Global roll-out of variable annuity franchise excites broker, but says this is a long-term and challenging initiative. Thinks higher vega hedging costs could reduce US VNB by 17%, ceteris paribus. adds the company is ahead of its Ambition 2012 schedule, but broker expects slippage (-6% variance by 2010). Struggles to see where the company has a first-mover advantage or a unique proposition.

FRANCE TELECOM (FTE) was up €0.47 to €25.08... Buys 25% stake of AlPi / Goldman ups target - the company buys a 25% stake of Spanish phone operator AlPi for €29.3 million. Goldman Sachs ups target to €28.40 from €27.11, keeping buy, following underperformance after last week's investor day (5 December). Thinks some analysts and investors had expected significantly more positive guidance. Nonetheless, says the company reassured that conditions in its key businesses are either stable or improving.

AIR FRANCE-KLM was down €0.46 to €24.79... Government decision this evening - The Italian government will meet this evening to discuss the sale of Alitalia ahead of its board meeting tomorrow. The FT writes that the sale presents Romano Prodi's centre-left govt with a politically tough choice between the financially proven but foreign ownership of the company or keeping it in Italian hands through its successful but much smaller rival, Air One.

Germany

CONERGY was down €3.06 to €22.89... Cuts guidance as 500 jobs to be axed - the company thinks revenues this year of €1 billion will probably not be achieved. EBIT is expected to come in between €-150 million and €-200 million. the company is discontinuing non-core activities in the areas of bioenergy and solar thermics. It is, therefore, shedding some 500 jobs. On the broker front, WestLB downgrades to reduce from hold, cutting the target to €17.00.

BAYER (BAYRY) was up €1.59 to €60.44... Talk of Novartis to bid EUR 70/sh - Following last week's vague talk that Novartis could be interested in the company , traders note rumours today that Novartis could bid €70 per the company 's share. JP Morgan lifts target to €75 from €74, reiterating overweight.

Italy

ALITALIA was up €0.02 to €0.88... Pilots union won't support Air One bid - Unlike other unions, Pilots' union APAC claims that the business plan presented by unions and associations will not deliver real European integration for the company Adds it will not allow the company to grow as a fourth, alternative European group. Air One could bid €0.95-€1.00/sh for the company Adds that unions would support a bid from Air One. Air One has unveiled bid details for the company The company says it would cut about 3,700 jobs adding that it has the support of four banks. The company says these banks are Intesa SanPaolo, Nomura, Morgan Stanley and Goldman Sachs. Air France- KLM announced that it will not transform the company into a regional carrier. The govt will meet this evening to discuss the sale of the company ahead of its board meeting tomorrow.

ENEL was down €0.05 to €8.29... Sees cost savings of up €1 billion for Endesa - the company has announced at a conference call that sees costs savings of above €1.03 billion p.a for Endesa. Adds that of those, €330 million p.a could come from the business plan prepared by Spain's Endesa. The remaining savings total €698 million of which the company plans EUR 680 million to be achieved by 2012. Of this, €457 million would be attributable to cost synergies and €223 million to investment optimisation. the company has announced that its offer for a retail bond had closed with total orders for €2.3 billion. Adds that of these, €1 billion were for the fixed-rate tranche of the bond and the remaining €1.3 billion for the floating-rate tranche.

ITALMOBILIARE was up €1.65 to €65.27... Cheuvreux upgrades to outperform from underperform as discount to NAV has risen to over 30%. The company says broker is now positive on the company and particularly on its main asset. Keeps €77.60 target price.

Netherlands

HAGEMEYER was down €0.32 to €4.34... Speculation of Rexel to lower price - the company will have to pay an advance payment of €50 million due to damages in a case related to the bankruptcy of its Ceteco unit. According to one analyst, the full charge is estimated at €160 million (excluding interest) and this may prompt Rexel to cancel its offer or, in a more likely scenario, lower its price by perhaps as much as €0.32 per share. the company will appeal against the judgement.

Nordic

GANT was down SEK7.00 to SEK312.00... Hostile SEK5.20 billion bid / Goldman ups tgt - Maus Freres, Switzerland's fourth largest clothes retailer and owner of the Lacoste brand, has launched a hostile SEK5.2 billion (US$813 million) takeover bid for the company , the FT reports. The company says the Swiss group conducted a market raid on Monday, snapping up 12.5% of the company from institutions. Meanwhile, Staffan Petterson, holding a 3% stake in the company says he will not sell to Maus Freres at the current bid at SEK310/share, Dagens Industri reports. According to Chairman Lennart Bjork, who has rejected the bid, the company 's major shareholders are against the takeover bid, Svenska Dagbladet reports. Goldman ups target to SEK310 vs SEK237, keeps neutral.

ASTRAZENECA (SE) (AZN) was up SEK1.00 to SEK301.50... Takes actions regarding Crestor ANDAs - the company has filed patent infringement actions in the US District Court against seven generic drug manufacturers, which have submitted Abbreviated New Drug Applications (ANDAs) for Crestor, it says in a statement.

Spain

INDITEX was down €2.55 to €47.20... Shares fall as sales disappoint - the company reports higher-than-expected nine months net earnings of €825 million, with the gross margin inching higher to 57.1%. Adds nine months net sales rose 17% to EUR 6.633 billion, below consensus of €6.68 billion. The company says like-for-like sales in the first six weeks of the new quarter are in line with expectations. Exane thinks the market will likely focus on the third quarter like-for-like sales growth performance, which the broker estimates at 2%, considerably weaker than the 7% achieved in first half07/08 and below broker's 4% forecast.

Switzerland

CLARIANT was up CHF0.64 to CHF11.15... Shares up after Julius Baer trading buy - Julius Baer has put a trading buy recommendation on the company with a target price of CHF14. Separately, the company is at Merrill Lynch's conference in London today and tomorrow.

UBS (UBS) was down CHF0.70 to CHF56.25... The brokers downgrade, cut price targets - Lehman downgrades to underweight from equal weight. After the company 's subprime write-downs and dilutive recapitalisation, broker lowers price target to CHF56 from CHF67. Exane BNP Paribas downgrades to neutral from outperform and lowers target to CHF67 from CHF73. Although it is reasonable to believe that the worst is now behind us, Exane says question marks remain as to whether further writedowns will be incurred in the coming quarters. The broker notes there was nothing new from the investor day, with the entire discussion focusing on the subprime issue. Goldman Sachs cuts target to CHF63.78 from CHF74.30, reiterates buy. WestLB cuts target to CHF71 from CHF81, reiterates buy.


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