European Indexes Turn Lower on Greece Worries; Philips Net Declines

Arthi Gupta
18 Apr, 2011
New York City

European indexes slumped on euro-zone sovereign debt concerns. Nestle acquired 60% stake in China-based Yinlu Foods. France Telecom-Orange and Deutsche Telekom agreed to form a venture to cut costs. Synthes confirmed talks with Johnson & Johnson.

[R]1:30 PM Frankfurt – European indexes slumped on euro-zone sovereign debt concerns. Nestle acquired 60% stake in China-based Yinlu Foods. France Telecom-Orange and Deutsche Telekom agreed to form a venture to cut costs. Synthes confirmed talks with Johnson & Johnson.[/R]

European markets declined after sovereign debt worries resurfaced and a meeting of G-20 finance ministers failed to produce another round of global economic stimulus. The forum has degenerated into a platform for talk and no concrete results have achieved in the last two meetings.

Greece denied media reports that the government asked the International Monetary Fund and the European Union to consider restructuring its debt.

Asian markets traded mixed after the People''s Bank of China hiked reserve requirement ratio for its banks by 50 basis points to a record high of 20.5%, effective from April 21.

As usual, rating agencies lagged in evaluating sovereign and bank debt.

Moody''s Investors Service on Monday lowered the long-term bank deposit ratings of Allied Irish Banks, Bank of Ireland, EBS Building Society and Irish Life & Permanent by two notches, while that of ICS Building Society was cut by one notch.

The Finland''s election commission late Sunday said the center-right National Coalition Party emerged as the largest party in the new Finnish Parliament with 44 seats and a vote share of about 20.4% while the opposition Social Democrats came in second with 19.1% of the vote.

True Finns made the biggest gains in Sunday''s polls, with the party winning 39 seats in the 200-member parliament after securing almost 19% of the votes polled and emerged as the country''s third largest political force.

In Paris CAC-40 Index declined 59.69 or 1.50% to 3,914.79 and in Frankfurt DAX index edged lower 94.60 or 1.32% to 7,083.69.

Nestle Acquires 60% Stake in Yinlu Foods

Nestlé S.A. acquired a 60% stake in Chinese food firm Yinlu Foods Group, without disclosing other details of the transaction.

Yinlu''s chairman Chen Qingyuan will continue to lead the company in the new partnership, Nestle added. The new partnership is expected to complement Nestlé''s existing product portfolio in China.

Philips Transforms TV Business into JV

Royal Philips Electronics NV agreed to transfer its loss making television business into a newly created joint venture with TPV Technology.

The joint venture will be responsible for television business activities worldwide, excluding mainland China, India, United States, Canada, Mexico and certain countries in South America.

Under the deal, the JV will be granted the right to use the Philips brand for the TV business in the related regions, and Philips will receive revenue-based royalty payments in exchange. The right will be for an initial term of five years with an automatic renewal for another five years.

Synthes Confirms Talks with Johnson & Johnson

Synthes, Inc. confirmed that it is engaged in discussions with Johnson & Johnson about a potential business combination transaction. The deal with J&J may be valued at $20 billion.

Synthes didn''t reveal any details of the talks, saying no assurance can be given as to whether, when or on what terms any possible transaction might occur.

France Telecom-Orange and Deutsche Telekom Form JV

France Telecom said its Orange unit agreed to combine its procurement activities with its German peer Deutsche Telekom AG in an equal joint venture, which is expected to result in significant cost savings for both companies after three years. The venture is expected to be established in the fourth quarter of 2011.

The venture is expected to yield €1.3 billion in combined savings of annual run-rate. The savings for Deutsche Telekom would total €400 million and for Orange would be below €900 million.

Gainers & Losers

BHP Billiton Ltd. fell 0.62% to $99.80 after the diversified natural resources company said that it released its Public Environmental Review /Draft Environmental Impact Statement to seek government approvals for proposed development of an Outer Harbour facility in Port Hedland.

The proposed Outer Harbour development is integral to BHP Billiton''s future expansion plans at its Western Australia iron ore operations.

Deutsche Bank AG dropped 1.57% to €40.43 after the global investment bank and LGT ended negotiations on the sale of BHF-BANK.

Hochtief AG declined 2.23% to €62.20 after the German builder, which is facing a takeover approach from its major shareholder Spain''s ACS Actividades de Construcción y Servicios S.A announced that its Chief Financial Officer Burkhard Lohr resigned from his post, after ACS passed the 30% participation threshold.

Koninklijke Philips Electronics NV gained 0.59% to €21.21 after the electronics corporation reported first quarter sales climbed 5.6% to €5.26 billion from €4.98 billion in the prior year. Net income in the quarter declined 31.5% to €137 million or 0.14 euros per share compared to €200 million or 0.21 euros per share last year.

Phoenix Solar AG decreased 1.23% to €22.48 after the photovoltaic systems provider said fiscal year 2010 revenues increased 34.4% to €635.7 million compared to 2009''s €473 million. Consolidated profit for the year surged 180% to €24.1 million, or 3.44 euros per share, from last year''s €8.6 million, or 1.28 euros per share.

Total SA fell 1.69% to €40.97 as crude oil prices edged lower in Europe and Asian markets.

ThyssenKrupp AG slumped 3.16% to €28.77.

UMS United Medical Systems International AG rose 1.03% to €7.86 after the full-service provider of solutions for mobile medical applications acquired Mobile Biopsy, Inc. of Statesville, North-Carolina, USA for an undisclosed amount.