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BMW Shares Fall

From Standard & Poor's European MarketScope


Adidas was up €10.38 to €158.45 after announcing that the company will acquire all of U.S. peer Reebok in a deal that would bring the combined company within touching distance of market leader Nike. Adidas will acquire all of the outstanding shares of Reebok for $59.00 per share in cash, a premium of 34.2% over the closing price of Reebok's stock on August 2. The transaction value of about €3.1 billion ($3.8 billion) includes the assumption of net cash of €69 million ($84 million). The transaction is subject to the approval of Reebok's shareholders as well as to the regulatory approvals and customary closing conditions. Meanwhile, on the earnings front, Adidas posted second quarter sales of €1.5 billion, 8.2% higher year on year, and in line with expectations. Its net profit of €94 million was 34.3% higher than the same period a year ago and slightly higher than expected. German peer Puma also rose €8.00 to €215.00 on the news.

BMW was down €1.67 to €37.95, after the company's second-quarter net profit came in at €663 million, a touch higher than expected. But pre-tax profit of €1.05 billion is below expectations. The company reaffirmed its full-year guidance for roughly flat earnings this year.

Auto-parts and tire maker Continental was down €0.77 to €66.45 after Deutsche Bank downgraded the company to hold from buy. Meanwhile, Citigroup lifted its target to €75 from €70 and reiterated its buy. Societe Generale increased its target to €75 from €72 and kept buy rating. ABN Amro lifted its target to €70 from €67, with an add rating.


Credit Suisse Group was down 0.90 Swiss francs to 53.30 francs, after its second quarter numbers came in below forecast. The financial services group reported quarterly net income of 919 million Swiss francs, down 36.9%. The result includes a charge for litigation provisions of 624 million Swiss francs after tax. The company explained that the quarter was impacted by the anticipated slowdown in market activity, and businesses experienced low levels of client activity in April and May. It expects the recovery in client activity in the banking business to continue and believes equity markets will improve in the second half.


PSA Peugeot Citroen was down €0.65 to €53.40 as the company could face a fine for blocking cross-border vehicle acquisitions after an inquiry found the company denied bonuses to German and Dutch dealers on sales for foreigners between 1997 and 2003, according to Bloomberg. Peer auto-makers Volkswagen, GM and DaimlerChrysler have been fined between €35.5 million and €90 million on the same charges.

Steelmaker Arcelor was up €0.32 to €18.35 after Credit Suisse First Boston said that there are visible signs that the steel market will recover in a three to six month time frame. The broker said stock-picking will be increasingly important as some steel groups have the power and the management ability to re-rate themselves through use of cash (from de-geared balance sheets) in the next six to twelve months. Arcelor remains the broker's favored play, while Corus looks interesting from an asset valuation perspective.

Advertising group Havas was up €0.16 to €4.50 after the company reported first-half revenue of €700 million, up 2.2% organically. Growth accelerated in the second quarter, rising 3% compared to 1.4% in the first quarter. The company reported net new business of approximately €500 million. Meanwhile, shares in British media buyer Aegis jumped on market talk of a bid by Havas, although a spokesperson for Aegis denied it.

Sanofi-Aventis was down €0.85 to €71.55 after it was reported that the company's former patented drug Imovane, the predecessor of the current sleeping-aid Lunesta, could generate as much as $1.27 billion in revenues by fiscal 2008 for the new patent holder, U.S. group Sepracor. Sepracor acquired the older formula after Sanofi-Aventis' subsidiary Rhone-Poulenc rejected a deal to market an updated version. Sanofi-Aventis' sleeping-aid Ambien, which must be carefully dosified as it may create addiction to the user, is facing an increasing challenge from Imovane.


Banca Antonveneta was down €0.13 to €25.26 after a Milan judge, Clementina Forleo, suspended Banca Populare Italiana's CEO, Gianpiero Fiorani, from his post for two months, the Italian press reported. Forleo, also confirmed the decision to seize the 40% stake in Antonveneta held by Populare Italiana and its allies. The bank Fortis said that these investigations could increase Dutch bank ABN Amro's chances of acquiring Antoveneta. Banca Populare Italiana was up €0.08 to €8.08 and ABN Amro was up €0.11 to €20.00 on the news.

Jewellery maker Bulgari was down €0.18 to €9.48 after the bank UBS downgraded the group to reduce from neutral.


Mobile operator Teliasonera was down 1.80 Swedish kronor to 37.50 kronor, after the company posted second-quarter earnings before interest, depreciation and amortization, excluding extraordinary items at 7.2 billion kronor, slightly lower than. Second quarter earnings before interest taxes and depreciation margin landed at 33.1%, compared to last year's 35.9%. Second-quarter sales came in slightly higher than expected, at 21.75 billion kronor.


BPB Industries, a supplier of plasterboard, was up £0.26 to £7.35 after French building materials group Saint Gobain launched a hostile bid for the company at £7.20 per share in cash, after failing to agree a deal with the board, despite three approaches. St. Gobain said that it had no option but to put its proposals to the group's shareholders. Following this unwelcome proposal, BFB's board announced a £350 million capital return to shareholders, which amounts to 70 pence per share. The group added that it intends to recommend a total year dividend of 23 pence. Saint Gobain was up €1.78 to €51.40.

Miner Rio Tinto was up £0.71 to £19.86 after the bank UBS raised its target price to £22.50 from £19.10 and upgraded the company to buy from neutral. Earlier, the company beat forecasts with first-half net profit of $2.1 billion, compared to $993 million a year ago, on metals demand. The group also announced the approval of a $775 million titanium dioxide project in Madagascar.

Satellite broadcaster British Sky Broadcasting was down £0.06 to £5.45 after reporting in-line results. The company reported fiscal year revenue of £4.0 billion, up 11% and operating profit of £805 million, up 34%. The company said that it remained on track to achieve its target of 8 million subscribers by December.

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