Hit Entertainment Rises on Takeover Interest
From Standard & Poor's European MarketScope
Hit Entertainment, which recently agreed to be acquired by private equity firm Apax, was up £0.34 to £3.34 Monday, after the children's media company said it has received two additional unsolicited early stage approaches. The company said there can be no assurance they will lead to an offer. Meanwhile, Lions Gate Entertainment, the Hollywood studio and distributor, is considering a cash bid of more than £530 million for the company to frustrate Apax's approach, the Financial Times reports. The company, which last month welcomed a £489 million bid by Apax, on Sunday confirmed it had received two unsolicited approaches, including a request from Lions Gate for detailed financial information. The company which controls lucrative children's TV assets such as Bob the Builder and Barney the Dinosaur, declined to name the other interested bidder. It is thought to be a non-U.S. private equity and media trade consortium.
Reuters was down £0.06 to £4.03 after the Financial Times reported that telecoms group O2 is set to announce the first technology tie-up to provide stock market data, foreign exchange and other financial news to investors. O2 has signed a deal with Knowledge Technology Solutions to offer real-time market data to its customers with 3G services. According to the article, O2 believes demand will rise rapidly with industry research group Strategy Analysts valuing the market for such data at $61 billion, rising to $190 billion by the end of the decade.
Virgin Mobile was down £0.04 to £2.18 after the Independent on Sunday reported the company is looking to expand into continental Europe, with Scandanavia at the top of the list.
Oil and gas group BG plc was up £0.12 to £4.27, after it was named on of Lehman Brothers top oil and gas stocks. The broker said that, so far, 2005 has been dominated by the rising oil price and strong performance of oil shares. The broker adds that it recently lifted company forecasts to reflect a much longer period of excess returns. The broker said the reality of rising costs and some indications of softening demand are reminders that this is a low-growth cyclical sector, and therefore it is reluctant to advise taking new positions at the top of the demand cycle. However, the broker also believes that consensus forecasts are too low, and that the sector is not expensive. Lehman Brothers recommends companies that are undervalued rather than those that are geared to the commodity, as there is downside risks in the oil price from current levels following the atypical inventory build over the winter. The broker said its preferred European stocks are BG plc, Total and Norsk Hydro.
Vivendi Universal was down €0.47 to €23.25 after it was reported that the company is willing to spend €650 million to end a legal spat over control of top Polish mobile operator PTC. The reports cited incoming chief executive officer Jean-Bernard Levy. The company is talking with troubled Polish conglomerate Elektrim but communicating only through the courts with the other party to the dispute, Deutsche Telekom.
Circuit-breaker manufacturer Carbone Lorraine was down €3.31 to €40.29, as the bank BNP-Paribas is selling its entire 20.87% stake, or 2.87 million shares, in the company via an accelerated book build. The stake is worth just over €125 million, based on Friday's closing price of €43.60 per share.
Aerospace giant Eads, the parent of Airbus, was down €0.45 to €23.00, after the U.S. deputy secretary of state, Robert Zoellick, reportedly stood his ground regarding the subsidies dispute, adding there was little manoeuvre in the negotiations between Airbus and Boeing ahead of the April 11 deadline. Zoellick will meet European officials today to discuss the dispute over aircraft subsidies. After the deadline, either side could seek a formal dispute settlement in the World Trade Organization.
Chipmaker Infineon was down €0.13 to €7.30, after the financial daily Boersen Zeitung reported that the company's chief financial officer P. Fischl reiterated aims to generate a positive earnings before interest and taxes (before one-offs such as a $118 million gain from a licence settlement with ProMOS and a mid-double-digit million euro amount for restructuring costs in fibre optics) in fiscal year 2005. Fischl cautioned that wireless chip operations continue to feel the weakness of its largest customer Siemens, which has lost market share in the worldwide mobile handset market last year. According to Fischl, the company's planned capital expenditure of €1.3 billion to €1.4 billion for a new plant in Malaysia and expanding the Richmond plant in the U.S. can be financed from cash flow and existing credit lines.
Volkswagen was down €0.39 to €36.18, after the company reported that US March sales came in at 16,738 units, down 22% from March 2004. First quarter U.S. sales fell 14.1% to 42,800. Passat sales fell 43%, the new Beetle sales fell 23.4% to 3000. Jetta sales gained 8.3% to 7,600. Separately, the company's Skoda unit agreed to raise employees salaries by 7% from June 2005. Unions had been looking for 10% and had started a series of one-day strikes.
Automotive supplier Continental was up €0.67 to €63.49, after Citigroup and Merrill Lynch increased their targets from €55 by an average of 25% for 2005 to 2007, following a strong set of results that comfortably beat consensus expectations. Broker Dresdner Kleinwort Wasserstein also raised its target to €70 from €65 and it rating to buy, while broker MM Warburg upgraded to buy from hold and set its target at €72.
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