Atos Rises on Bid Talk
From Standard & Poor's European MarketScope
Atos, management consulting and IT services group, was up €2.35 to €59.70, after the newspaper Handelsblatt reported that Deutsche Telekom's T-Systems unit is studying the option of taking over the company. The brokerage Cheuvreux said that as far as T-Systems is concerned, the transaction would allow the group to increase its operations abroad. The brokerage added that funding would not be a problem, and the deal is likely to be accretive. Credit Suisse First Boston thinks Deutsche Telekon is more likely to pursue interest in Briain's 02 mobile service provider than to try a deal with Atos at this point. The broker notes that Atos stated earlier this year that it is interested in acquiring parts of Siemens Business Services and said that it is more likely that the company is a buyer than a seller now, given the significant new debt facility it arranged earlier this year.
Total was down €2.60 to €208.30 after the shares accumulated gains on recently soaring oil prices. Stocks reached highs of as much as €213.4 per share August 11 from lows of around €172.9 per share on May 16. Separately Citigroup said that it favors the company, along with Britain's BP and Italy's Eni in the oil sector.
Britain British Airways was down £0.07 to £2.83 after Citigroup lowered its earnings forecasts for this year (by 8%) and next year (by 2.5%) as a result of the 24-hour closure of the airline on August 11 and 12. The broker cut its opera ting result for the September quarter and full-year by £40 million, including £25 million less revenue and £15 million in disruption costs. It calculated that the earnings impact could be up to £35 million higher still, should the European Union's denied boarding compensation rules apply. It retained its "buy" rating and target price of £3.30.
Mining group Antofagasta Holding was up £0.22 to £14.91 after The Guardian newspaper reported that the company has been boosted by copper price as well as bid speculation, following the death last week of Andronico Luksic, its biggest shareholder and driving force. The report said that traders think that the company could be vulnerable to a bid and is on the wish-list of several of its mining peers, including Anglo American.
Online gambling website Partygaming was down £0.05 to £1.69 after Goldman Sachs initiated coverage with an "in line" rating. The broker said that, as the clear market leader in online poker (which accounts for 94% of group revenues), the company is the best play on the industry's current strong growth momentum, which could well drive further short-term outperformance. However, the broker said that fair value (which attempts to balance the risk and rewards of ownership) of £1.80 implies only 5% upside from current levels.
Online gambling website Sportingbet was down £0.08 to £3.75 after Goldman Sachs initiated coverage with an "underperform" rating. The broker said that despite the (technical) illegality of its U.S. sportsbook product and its lower exposure to the online poker market, the company trades at a small premium (unwarranted, in broker's view) to Partygaming. The broker added that, following a 273% appreciation over the past 12 months, it believes further upside is limited. The broker set a fair value target of £3.44, implying 10% potential downside from current levels.
DaimlerChrysler was down €0.55 to €42.14 after the newspaper Frankfurter Allgemeine Zeitung reported that hedge funds already own about 20% of the company's shares, and are trying to force the company to intensify its restructuring efforts.
Porsche was down €12.28 to €643.22 after the newspaper Boersen Zeitung reported that the company sees fiscal-year 2005 sales rising to about €6.8 billion compared to €6.4 billion last year.
Real estate financing company, Hypo Real Estate Group, was down €1.59 to €40.16 after sources reportedly said that private equity firm Blackstone is not interested in the company. Rumors of a €48 per share bid pushed the stock higher yesterday.
Financial services group Fortis was down €0.23 to €23.60 after the Times reported that the company has hired Merrill Lynch to find it a joint venture partner for its €100 billion fund management group. The paper added that the company is aiming to increase the profitability of Fortis Investments through the creation of a joint venture. Separately, ahead of Thursday's second-quarter results, the bank UBS expects group net profit of €702 million, a sharp slowdown from the €1.5 billion of the first quarter, which was boosted by substantial capital gains. The bank rates the stock "neutral" with a €23 target. Lehman Brothers expects another robust quarter with net profit of €821 million, and keeps an "underweight" rating on the stock.
Banca Populare Italiana was up €0.09 to €7.94 after the Bank of Italy denied that governor Antonio Fazio is launching an internal investigation on the two inspectors at the bank that advised him not to approve the company's bid for Italian bank Banca Antonveneta, as earlier reported by the newspaper Corriere della Sera. The inspectors allegedly applied more restrictive rules, which were not applicable before January. Fazio later approved the company's bid. Separately, note that the company's advisors Dresdner Kleinwort Wasserstein and Lazard reportedly started negotiations to sell the company's stake in Antonveneta yesterday. ABN Amro, Deutsche Bank and Royal Bank of Scotland are said to be among potential buyers.
Mobile and web entertainment service provider Dada was up €0.63 to €14.54 after Britain's Monstermob, a provider of mobile phone games and ringtones, agreed to buy ATOP Century, a Chinese rival, in a cash and shares deal expected to be worth $100 million, the Financial Times reported. The news reignites interest in the sector, pushing the company's stock to its highest level since 2001.