Markets gained on M&A talk Monday
From Standard & Poor's European MarketScope
European indexes gained Monday on M&A activity. Wall Street also traded in the black as crude steadied above US$57/bbl.
UK: The FTSE 100 index closed firmly in positive territory. Merger talk in the banking and travel sectors provided support. Banking stocks minted gains after Barclays (BCS) (-1.61%) and several other big European banks reportedly approached ABN Amro (ABN) about a takeover. Barclays said it would make a statement on its position Tuesday.
Among travel stocks, First Choice (+8.27%) agreed to merge with TUI Travel to create TUI Travel Plc, which will have revenues of £12 billion. In other news, KKR is mulling a revised bid for Alliance Boots (+1.44%) that will value it at up to £10.60/share, The Independent on Sunday wrote.
The WSJ reported that Bain, Apollo and Vornado have held early talks about a possible bid for Sainsbury (+0.45%). In earnings news, Wolseley (+4.09%) posted an 8.3% fall in first half pretax profit, adding that it expected US housing market to continue to remain soft. The world's largest distributor of plumbing and heating products and building materials said it will look at buys to hit its double-digit growth target.
Among losers, Imperial Tobacco (ITY) (-1.85%) slipped after Altadis rejected its offer, while Morrison (-1.18%) fell on broker cuts.
France: The CAC 40 index (+1.31%) closed the session firmly higher boosted by M&A news in the financial sector: BNP Paribas (+2.34%), SocGen (+2.89%) and the UK's Barclays are among banks that have signaled interest in making a bid for ABN Amro, WSJ reported. Axa (AXA) (+1.90%) bought Hungarian retail bank Ella for an undisclosed amount. Dexia (+7.13%), also a potential target, jumped after Friday's dive, describing its sub-prime exposure as 'fairly limited'.
Elsewhere, EADS (-1.82%) fell as reports suggested that Malaysian Airlines could cancel its A380 order. Francois Pinault may ally with the Mittal group as he seeks to buy a majority stake in Vinci (+2.27%), La Lettre de l'Expansion reported, citing unidentified US investors. Coca-Cola (KO) is developing a 'beauty' drink in conjunction with L'Oreal (+1.74%) that could sit on boutique department store shelves alongside beauty products, the Sunday Telegraph said.
Accor (+1.90%) won a 20-year contract to manage 23 UK-based Merck hotels. Eramet (+5.71%) surged on takeover speculation after Boehler-Uddelholm said it might be acquired. Bloomberg wrote that steel is beginning to turn rusty in the stock market, on interviews with UBS and Credit Suisse analysts saying the risks of a drop are mounting. Arcelor Mittal (-0.48%) underperformed.
Germany: The Xetra-Dax index (+1.4%) rose further in afternoon trading and closed firmly higher, as did the rest of Europe. TUI (+9.63%) topped the DAX gainers by a wide margin after agreeing to merge its tour operating business with UK's. WestLB regarded the tie-up as a sensible reaction to the recent merger of Thomas Cook and MyTravel. It reckoned that the market was likely to view the transaction and the new setup of the TUI group as a first step in the break-up of the two pillar strategy of shipping and tourism.
In the auto sector, VW (+0.4%) was eyed after the FT reported that it was close to a deal to take over the manufacturing unit of ailing Malaysian car maker Proton Holdings. On the earnings front, Deutsche Postbank (+2.5%) remained high after reporting better-than-expected 2006 results.
Key on the broker front, Citigroup and Credit Suisse upgraded Deutsche Bank (DB) (+1.74%) to buy and outperform, respectively. CS said panic selling related to US sub-prime was overdone. An announcement on a new management structure at Deutsche Boerse (+2.50%) brought the stock into focus in late trade.
Elsewhere: Italian shares closed today's trading session with firm gains - breadth was 37-3 positive.
In Zurich, the SMI (+1.42%) paced ahead today, along with the rest of Europe and the US on the back of several takeover deals.