Commerzbank Rises on Merger Talk
From Standard & Poor's European MarketScope
Retailer Next was down £0.18 to £14.53 after the bank Dresdner Kleinwort Wasserstein cut its target to £15.50 from £16.00, and reiterated its hold rating.
Lloyds TSB was up £0.05 to £4.69, after Merrill Lynch said it does not expect a British consumer meltdown, but in a slowing top-line environment and rising cost of credit, recommends better diversified plays with less reliance on the British consumer. Still, the broker sees limited downside from here, so maintains its neutral recommendation and fair value target of £4.63.
British Airways was down £0.03 to £2.78 after Morgan Stanley adjusted its revenue growth estimates to 4.7% for fiscal-year 2006 and 2.4% for fiscal-year 2007. At the operating level, the broker expects £557 million in fiscal-year 2006, improving to £652 million in 2007 and rates the company equalweight.
Engine-maker Rolls-Royce was down £0.04 to £2.89 after the company signed agreements with France's Regional Airline, a subsidiary of Air France-KLM, to service the unit's fleet of 49 Embraer and Fokker planes. The agreements were signed at the Paris Air Show, although no value was given for the deal.
Building-materials group Hanson was down £0.07 to £5.32 after the Guardian reported market speculation about a possible bid for the company. France's Lafarge is considered the most likely buyer, since Lafarge has a taste for big British deals, is a fan of vertical integration and has made no secret of its desire to beef up its operations in California, one of the company's biggest markets, according to the report. The paper also said that Hanson's new chairman, Mike Welton, could be receptive to an offer, but analysts think Lafarge is unlikely to strike until Hanson has sorted out its exposure to asbestos lawsuits in the U.S.
Football club Manchester United was up £0.11 to £3.09 after American businessman Malcom Glazer said that he owns 97.3% of the issued capital following the closing date of the offer. He is extending the offer until 3 p.m. on June 27.
Aerospace and defense giant EADS, parent of Airbus, was down €0.19 to €23.66 after the company's rival Boeing won a $2.8 billion deal with India's Jet Airways for ten 777 carriers and another ten 737 planes. According to the newspaper Les Echos, the Malaysian defense minister Najib Razak has expressed interest in the company's Tigre helicopters. The helicopters are produced by the company's Eurocopter unit. Meanwhile, Bloomberg reported that BAE Systems CEO Mike Turner said that Airbus has delayed the launch of the new A350 model because of demand for resources from existing airliner programmes.
The bank BNP-Paribas was down €0.35 to €55.90, after the company acquired the U.S. bank Commercial Federal Corporation for €1.12 billion. The bank said that the merger will generate significant pre-tax cost synergies estimated at $54 million, creating shareholder value from 2006 onwards. The company said that the US is one of its major priorities for expansion in retail banking. Dresdner Kleinwort Wasserstein said that the deal makes both financial and strategic sense and is immediately accretive. The bank remains the broker's best pick in France.
Mailroom equipment maker Neopost was up €0.90 to €76.60 after Credit Suisse First Boston upgraded the company to neutral from underperform and raised its target price to €75.0 from €53.8, following strong first-quarter of 2005 sales. The broker notes that the acceleration of sales growth was due to a pickup in Germany and North America.
Generic drugmaker Stada Arzneimittel was up €0.71 to €26.41 after the company reiterated its 2005 forecasts, saying it expects its fiscal-year net to be 25% higher at more than €60 million with a 10% increase in sales and profit growth this year. CEO Hartmut Retzlaff is speaking at the company's annual general meeting in Frankfurt today. He said that 2005 will be the 10th record year in succession, and that he expects to achieve double-digit growth in years to come.
Commerzbank was up €0.22 to €18.49 after the Financial Times Deutschland reported that the company has been in exploratory talks with state-owned bank WestLB about a merger in the last couple of weeks, citing unidentified sources. The newspaper did not know if the talks are still ongoing.
Drug and chemical maker Bayer was down €0.19 to €28.43 after the Financial Times Deutschland reported that the drugmaker plans "bigger purchases" for its health care unit, citing the company's chief executive Werner Wenning. Purchases for its other two units, plastics and crop treatments, would not get approval, Wenning added.