SBS Rises on Takeover Deal
From Standard & Poor's European MarketScope
European broadcaster SBS Broadcasting was up €2.89 to €46.19 after the company announced that it has entered a definitive agreement for its business to be acquired by funds advised by Permira and affiliates of Kohlberg Kravis Roberts & Co. in a transaction valuing it at about €2.09 billion. Following completion of the acquisition, the company will be liquidated and cash and proceeds will be distributed to shareholders. Shareholders and option holders are to receive €46 per fully diluted share.
Tui, a tourism, shipping and transport group, was down €0.46 to €19.44 after making a $2 billion cash bid for Canada's CP Ships. A successful deal would create the world's fifth-largest container shipping group. The company will sell €1 billion of new shares to existing stockholders to help finance the purchase.
Real estate financing company Hypo Real Estate Group was up €2.55 to €42.00 on rumors that private equity firm Blackstone and a partner may bid €48 per share for the group.
Adidas was down €3.84 to €144.30 after Merrill Lynch downgraded the group to neutral from buy. Further on the broker front, the brokerage Cheuvreux noted that both Foot Locker and Dick's Sporting Goods delivered disappointing results for their second-quarter 2005 period, but it doesn't believe that one can draw the conclusion of a deteriorating market environment for the company. It rated the stock "outperform."
Volkswagen was up €0.85 to €44.85 after the company's former works council chief Klaus Volkert quit after a corruption probe was widened to include him.
Drugmaker Sanofi-Aventis was down €0.90 to €71.80 as the company could be hit today on news a U.S. Court has ruled its rival Merck is liable for a damages worth $253 million to the family of a man who died of an irregular heart beat after using its drug Vioxx. British peer Glaxosmithkline was also down £0.14 to £13.32 on the news.
Pinault-Printemps-Redoute, retail group and owner of Gucci, was up €2.55 to €87.00 after Lehman Brothers increased its target to €95.0 from €88.0 based on the firm's analysis of the Gucci brand's recent outperformance and encouraging potential. Meanwhile, the broker reiterated its "overweight" rating. The Cheuvreux said that given the strong momentum at Gucci and an attractive valuation, there is scope for a tangible re-rating in the coming months.
Fiat was up €0.23 to €7.25 ahead of the expiry of its €3 billion convertible loan due in September. Domestic sources believe the banks are supporting the price of the company's stock.
Engineering firm ABB was up 0.15 Swiss francs to 9.13 after a U.S. bankruptcy court gave the company permission to continue with its $1.4 billion asbestos settlement plan. The company said that after the court's endorsement it could present its settlement plan to claimants in the case. In case they approve it, the plan will go back to the court for confirmation.
Business services and pest control group Rentokil Initial was up £0.16 to £1.68 after Sir Gerry Robinson's Raphoe Management confirmed it intend to approach the board to discuss the possibility of making an offer for the company and to seek discussions with the trustees of the company's pension funds. The press reported that Rentokil investors want Robinson to become executive chairman. Robinson last month set up Raphoe Management as a vehicle for investing in under performing UK companies with inappropriate management or inefficient capital structures. Meanwhile, ahead of Thursday's results, Credit Suisse First Boston forecasts first half revenues of£1.20 billion, +1.9%, and calculates that adjusted 2005 and 2006 earnings per share numbers will fall 10 and 12% respectively due to International Financial Reporting Standards.
Miner BHP Billiton was up £0.25 to £8.44 ahead of Wednesday's results. The investment bank Dresdner Kleinwort Wasserstein expects a strong outlook statement with reference to an extended cycle of high commodity prices. It said that rising cost pressures will again be in focus, although results have shown these have not been as adverse as the market feared. It reiterated its buy rating and target price of £10.