European Movers: Rio Tinto, France Telecom, KPN
RIO TINTO Up GBP2.07 to GBP60.50... Mittal mulls move to ensure ore supply - The FT writes that Lakshmi Mittal is considering entering the takeover battle for Co.
BARCLAYS Down GBP0.10 to GBP2.89... Varley insists GBP4.5bn is enough - Chief executive John Varley has shot down speculation that the GBP4.5bn Co. is raising may not be enough for it to ride out the credit crunch, in an exclusive interview with The Sunday Telegraph. Varley was adamant that extra financing will not be needed, after a Citibank note on Friday saying the fundraising falls about GBP9bn short.
ANGLO AMERICAN Up GBP1.46 to GBP35.42... Eyeing Rio and BHP iron ore assets - Co. has set up teams to study the iron ore assets of Rio Tinto and BHP Billiton should the mining giants be told to divest operations as a requirement of the merger, The Daily Telegraph reports. Says Co. is understood to be keen on picking up iron ore projects in Australia - seen by many as the most likely assets to be sold if regulators force disposals on BHP.
TAYLOR WIMPEY Up GBP0.02 to GBP0.64... Confirms seeking additional financing - Says is in talks for raising additional financing - most likely be via a placing and open offer. Expects a GBP550m writedown in the UK. Agrees an amendment to the terms of the revolving credit facility with its banks.
VODAFONE Up GBP0.07 to GBP1.49... Buying opportunity - Cazenove Cazenove thinks recent weakness is a buying opportunity. See Brokers Views and News UK. Credit Suisse cuts target to GBP1.80 from GBP2.00 to reflect the deteriorating economic outlook. Keeps outperform. Co.'s Qatar's mobile phone unit is planning to sell 40% stake in its IPO in September and 15% to local institutional investors, The Peninsula paper writes. Co. and MySpace have created an online global interactive platform allowing music fans in Germany, Italy, Spain and the UK to experience music in the social networking space.
FRANCE TELECOM Up EUR 1.26 to EUR 18.71... CFO comments / Brokers upgrade - Co. announces it has decided not to submit a firm offer to TeliaSonera's shareholders. The parties were unable to agree financial conditions. CFO Gervais Pelissier has said there is no certain alternative European target now and says that it is becoming more plausible Co. will return cash to shareholders, but adds Co. will seek to strengthen its position in European markets, Reuters reports. Cheuvreux upgrades to Selected List from outperform following the TeliaSonera announcement. Says Co. is back to a more traditional M&A scenario, with potential FCF redistributed to shareholders. Dresdner Kleinwort upgrades to hold from sell and lifts target to EUR 20.00 from EUR 17.50.
CARREFOUR Up EUR 1.05 to EUR 35.96... Exane BNP Paribas upgrades to neutral - Exane BNP Paribas upgrades to neutral from underperform, keeping its EUR 50 target, after the stock 'finally crashed' on profit warning expectations. Adds Co.'s valuation is now in line with the sector, which is fair in broker's view. Goldman Sachs trims target to EUR 41 from EUR 53 after Co. cut its 2008 guidance after market close on 26 June. Keeps buy. See Broker Views & News - France. Co. may be a possible j/v partner for India's Future group, reckons Indian newspaper The Economic Times.
ARCELOR-MITTAL Down EUR 0.91 to EUR 62.80... Eyes Rio Tinto move to ensure ore supply - FT - Lakshmi Mittal is looking at entering the takeover battle for Rio Tinto, according to people familiar with the matter, the FT reports. Says Mr Mittal is keen to secure larger supplies of iron ore. Co. says it intends to acquire 60% of the entire issued share capital of DSTC FZCO, a newly incorporated company located in the Dubai free zone. Says DSTC FZCO will acquire the main business of a steel distributor in the UAE, Dubai Steel Trading Company.
ADVA Down EUR 0.78 to EUR 1.61... Cuts sales guidance / WestLB downgrade - 2Q revenues are forecast to range between EUR 50m and EUR 52m, down from previous guidance of between EUR 55m and EUR 59m.
On the broker front, WestLB downgrades to hold from buy, dropping Co. from its mid and small cap focus list.
AIR BERLIN Down EUR 0.28 to EUR 3.80... End-of-quarter portfolio adjustments weigh as Co. sees itself dropped in many instances, traders note.
BANCA ITALEASE Up EUR 0.37 to EUR 6.05... Banco Popolare to sell 10% stake to DZ Bank - Co.'s largest shareholder, Banco Popolare, has agreed a MoU with Germany's DZ Bank on an industrial alliance, according to Sunday's Il Sole 24 Ore. Says that under the deal, DZ Bank will buy 10% stake of Co. from Banco Popolare and more later. Meanwhile, Saturday's Il Messaggero reported that DZ Bank would go ahead with due diligence on a deal. The bank's boards are expected to approve the letter of intent early this week.
INTESA SANPAOLO Up EUR 0.01 to EUR 3.63... Exane upgrades to outperform from underperform and cuts target to EUR 4.70 from EUR 5.20. Lowers EPS adj by 6% in 2008e, 11% in 2009e and 14% in 2010e. Says new estimates factor in: 4.6% CAGR 2007-2010e for revenues; -1% CAGR 2007-2010e in costs, including the recently disclosed additional cost-savings; 50bp net provisions in 2010 which corresponds to a trough cycle level; tax rate at 33%; DPS at EUR 0.25 in 2008e, which broker would consider sustainable as soon as Co. begins to realise the massive EUR 7-8bn asset disposal programme. Separately, Co. has announced to have concluded the acquisition of Ukraine's JSC Pravex-Bank for EUR 493m ( EUR 11m less than what was initially announced in February).
KPN Up EUR 0.24 to EUR 10.90... Speculation rises after FT withdraws bid for TeliaSonera - Traders say speculation increases that Co. could be seen as a takeover target after France Telecom withdrew its bid for TeliaSonera.
ASML Up EUR 0.28 to EUR 15.65... Credit Suisse ups target to EUR 21 from EUR 20 based on 15x of broker's new 2009 EPS estimate of EUR 1.39. Maintains outperform recommendation. Says although the road ahead is bumpy and there is downside risk to Co.'s 2008 guidance, 2009 should see a return to growth with market share gains and capacity buying picking up. The stock remains broker'stop pick in the European semiconductor sector and believes it remains undervalued compared to peers.
LUNDBECK Down DKK12.00 to DKK108.00... US$100m write-down as drug trail fails / S&P ER cuts tgt - Co. will book a US$100m write-down in 2Q following a failed phase III trail for Flurizan, an alternative Alzheimer's disease drug. The setback will also prove a blow to US backer Myriad Genetics that separately states it will discontinue development of the drug. S&P ER cuts tgt to DKK117 vs DKK126, keeps hold rating. Removes Flurizan's risk-adjusted contribution from its models and says it acknowledges the arising increased business risks and depressed investor sentiment.
ERICSSON Up SEK2.00 to SEK62.80... Brokers cuts target - Goldman cuts target to SEK71 from SEK85, keeps neutral. S&P Equity Research cuts target to SEK70 from SEK75, keeps hold UBS lowers target to SEK70 from SEK77.50, keeps neutral. Credit Suisse cuts target to SEK75 vs SEK85, keeps neutral. Exane cuts target to SEK95 from SEK100, keeps outperform. See Broker Views & News - Nordics.
IBERDROLA Up EUR 0.04 to EUR 8.51... Petroceltic deal / Natixis ups stake - Co. has entered into a strategic alliance with Petroceltic to develop oil and gas assets in north Africa and Italy. Co. is to invest US$55m in Petroceltic via a placing of 215.8m shares, giving Co. a stake of 22.64%. Natixis has increased its holding in Co. to 5.529% from 3.781% previously. Co. will make 27 concessions to its proposals to buy Energy East in order to secure approval from the New York Public Services Commission, El Mundo writes.
CAMPOFRIO Down EUR 0.49 to EUR 8.59... Boards approve merger project - The boards of Co. and Smithfield Foods have approved the proposed merger of Co. with Smithfield's European unit. Co. says the merger is conditional on Smithfield not being forced by the CNMV to launch a full bid, since it will hold more than the 30% threshold.
HOLCIM Down CHF2.10 to CHF81.75... Exane BNP Paribas downgrades to neutral from outperform. Keeps an underperform on the building materials and construction sector. Says volumes are likely to disappoint, possibly also in emerging markets. Cuts target to CHF81 from CHF121.
UBS Down CHF0.96 to CHF21.44... Considers Paine Webber sale in review - Reuters reports sources saying Co. is considering the sale of Paine Webber, which it bought nearly eight years ago for about US$10bn as a bridgehead into North America. The overall review is due to be concluded by October. Separately, estimates for the Co.'s 2Q net loss are being mentioned in the Swiss press as being as much as CHF5bn.