Greece in Focus; Akzo Nobel Plunges 10%

Arthi Gupta
27 Jun, 2011
New York City

The European indexes traded sideways ahead of Greece

[R]3:40 PM Frankfurt – The European indexes traded sideways ahead of Greece’s austerity plan debate today. U.S.-based Stanley Black & Decker offered to acquire Niscayah for $1.2 billion. Philips agreed to buy mammography equipment business for €57.5 million. Akzo Nobel plunged 10% on weak second quarter outlook.[/R]

European markets traded higher in a cautious trading as investors speculated the quick passage of Greek austerity measures this week. Italy, increasingly the focus of bond investors completed the sale of treasury bills that yielded 30 basis points higher at 1.988%.

Banks edged lower after new capital rules require an increase in capital. Asian markets declined tracking the Friday’s losses in Europe and New York.

The intergovernmental organization, generally referred to as Basel Committee on Banking Supervision that oversees world banking decided to increase capital requirements for banks between 1% and 2.5% and add a surcharge of 1% to banks that are facing highest risk related charges.

The watered down move agreed by the banks is expected to be implemented between 2016 and 2018 and become fully effective in 2019. The delay in implementing these reforms will leave banks vulnerable if another world crisis develops in the next five years.

The Greek parliament begins a debate on the austerity measures today and a vote is expected on Wednesday.

The Greek central bank governor George Provopoulos said in an interview to the Athens daily Kathimerini that the government should enhance revenue by reducing tax evasion.

Provopoulos also noted that the €5.6 billion of additional measures to cap a gaping hole in the €28 billion program of spending cuts and tax increases has put extra pressure on the taxpayers.

German Finance Minister Wolfgang Schaeuble said in an interview to the German weekly Bild am Sonntag that if the Greek Parliament fails to approve the austerity measures, then the conditions for getting the next tranche of aid will not be met.

However, he was confident that the Greek Parliament would approve the austerity measures.

Nissan, the Japanese automaker said in its mid-term business plan that it expects to increase its share in the global auto market by 8% within the next 6 years and also boost its operating profit margin to 8% by the fiscal year ending March 2017.

In Paris CAC-40 Index gained 4.78 or 0.13% to 3,789.59 and in Frankfurt DAX index edged higher 10.48 or 0.15% to 7,131.86.

Stanley Black & Decker Offers to Acquire Niscayah

Stanley Black & Decker, the diversified industrial company made an offer to acquire Niscayah Group AB, a commercial security and monitoring company specializing in electronic security services and solutions based in Stockholm, Sweden, for SEK18.00 a share in cash.

The total transaction value including assumed debt would be SEK7.6 billion or $1.2 billion.

Philips Buys Sectra's Mammography Equipment Business

Royal Philips Electronics agreed to acquire the mammography equipment product line of Sectra AB, a Swedish provider of medical systems and secure communication systems for a cash consideration of €57.5 million on a cash and debt-free basis.

Philips said the acquisition will help it to broaden its product portfolio with a unique digital mammography solution for breast screening that enables breast screening with less X-ray radiation dose.

Gainers & Losers

Akzo Nobel NV plunged 10.07% to €41.12 after the Dutch specialty chemicals firm estimates second quarter results to be adversely impacted by ongoing “challenging trading conditions” and one-time factors.

Barry Callebaut AG fell 1.04% to €808.50 after the Switzerland-based producer of cocoa, chocolate and confectionery products signed a new, long-term outsourcing agreement with Chocolates Turin.

Cap Gemini S.A. gained 0.40% to €38.90 after the French technology firm is looking for acquisitions to strengthen its position in the U.S. market, especially in the healthcare sector, the FT.com reported citing an interview with the company’s CEO Paul Hermelin.

Deutsche Telekom AG rose 0.96% to €10.48 and the company was selected to provide worldwide satellite communication to Total S.A.