European Indexes Lower; Schneider Offers $2 Billion for Telvent

Arthi Gupta
01 Jun, 2011
New York City

European indexes slid after manufacturing growth in China slowed. Greece remained in focus. France-based Schneider Electric agreed to acquire Telvent for $2 billion. Intact Financial offered C$2.6 billion for AXA Canada. Lenovo agreed to buy Germany''s Medion for

[R]2:00 PM Frankfurt – European indexes slid after manufacturing growth in China slowed. Greece remained in focus. France-based Schneider Electric agreed to acquire Telvent for $2 billion. Intact Financial offered C$2.6 billion for AXA Canada. Lenovo agreed to buy Germany''s Medion for €13 per share.[/R]

European markets traded sideways as markets focused on the Greek debt resolution. The bailout terms for Greece are expected to be finalized today but the Greece’s ability to repay debt in the next three years is uncertain as the economy shrinks, tax receipts decline and bank withdrawals mount.

Market sentiment was also dampened after manufacturing grow rate declined in China partly because of power shortage and the lack of parts from Japan.

Asian markets traded mixed after China Federation of Logistics and Purchasing said that its purchasing managers'' index for the manufacturing sector fell to 52 in May from 52.9 in April.

Euro-zone manufacturing growth fell sharply to a seven-month low in May, survey data from Markit Economics showed today.

The final Markit Purchasing Managers'' Index dropped to 54.6 in May from 58 in April and the latest decline was the biggest since November 2008.

The European Central Bank, the International Monetary Fund and Greece are drafting the final details of the country''s latest bailout package, with an agreement expected to be announced either tonight or on Thursday.

The bailout package of 50 billion euros is expected to provide Greece at least two years before it needs to seek funds from investors.

Greek 10-year bond yields declined to 15.3% from 16.8% on Monday.

In Paris CAC-40 Index declined 1.60 or 0.04% to 4,005.11 and in Frankfurt DAX index edged lower 13.56 or 0.19% to 7,280.13.

OECD Growth Remains Flat

The OECD area economy expanded at a steady pace in the first quarter, the Organization for Economic Cooperation and Development said today.

Gross domestic product increased 0.5%, equaling the previous quarter''s pace of growth. European Union growth rose to 0.8% in the first quarter from 0.2% in the previous quarter.

Annually, OECD GDP increased 2.5% in the first quarter, slower than 2.8% in the previous three months.

Schneider Electric Acquires Telvent

Schneider Electric S.A., the French energy management company signed an agreement to acquire IT solutions provider Telvent GIT, SA for an enterprise value of $2 billion or $40 per share.

Schneider believes the complementary geographical strength of the two firms will lead to significant synergies in the utilities, oil & gas, water and transportation markets. The merger is expected to generate revenue synergies of €250 million to €300 million by 2016.

Intact Buys AXA Canada

Intact Financial Corp. agreed to acquire the Canadian arm of Paris-based AXA Group for C$2.6 billion in cash, in a move that will enhance the premium base of Canada''s largest property and casualty insurer.

For Intact Financial, the deal will expand its Canada written premium by C$2.0 billion to over C$6.5 billion.

Lanxess Contemplates Buying Taminco

Lanxess AG, the German specialty chemicals company is in talks to buy Belgian chemicals group Taminco NV from private equity firm CVC Capital Partners Ltd. for about €1 billion or $1.4 billion, the Financial Times Deutschland reported on Tuesday.

The acquisition is the largest in Lanxess'' history.

Lenovo Purchases Medion

Lenovo Group Ltd., the Chinese personal computers maker said it is acquiring Medion AG, a German manufacturer of PC, multimedia products, mobile communications service and consumer electronics, for €13 per share in cash.

The deal would help Lenovo to expand its business in Western Europe, where it strengthened its profitability and market share position during the past year.

Gainers & Losers

Axa SA rose 2.62% to €15.23 after the French insurance and asset manager stated it plans for pre-tax cost savings of €1.5 billion or about $2.16 billion in its mature markets by 2015. The company also expects to achieve a compound annual growth rate of 10% in underlying earnings per share by 2015.

Banca Monte dei Paschi di Siena SpA slumped 5.75% to €0.83 after the Italy-based company said its major shareholder, Fondazione Monte dei Paschi di Siena is selling 450 million shares.

Schweizerische Rueckversicherungs Gesellschaft AG fell 0.79% to Sfr50.40 after the reinsurer stated that it will acquire about 0.3 million life insurance policies and total assets of around £1.6 billion from American Life Insurance Co. in order to strengthen the market presence of its business unit Admin Re.

VimpelCom Ltd. Increased 2.10% to $14.08 after the mobile phone operator stated first quarter net operating revenues rose 23% to $2.74 billion compared with $2.23 billion in the previous year. Net income in the quarter increased 54.6% to $589.7 million or $0.46 per share from $381.5 million or $0.38 per share a year earlier.

ZhongDe Waste Technology AG climbed 0.01% to €8.50 after the Germany-based company engaged in the waste management activities in China reported first quarter net loss narrowed 30% to €1.4 million compared to a net loss of €2 million in the year-ago period.