Barclays, Depfa Bank Lead Europe Higher

Elena
23 Jul, 2007
New York City

European stock markets closed higher on Monday, driven by merger deals in the financial sector with British banking giant Barclays and insurer Friends Provident in the spotlight. Barclays advanced 3% after it agreed to sell a 19% stake to China Development Bank and Singapore''s Temasek Holdings in order to fund an improved bid of 67.5 billion euros for Dutch bank ABN Amro. Germany advanced 0.9%, France also added 0.9%, and the U.K. gained 0.6%.

[R]1:00PM NY, 5:00 PM Frankfurt European markets advanced, lifted by merger deals in the financial sector.[/R]

European stock markets closed higher on Monday, driven by merger deals in the financial sector with British banking giant Barclays and insurer Friends Provident in the spotlight. Gains generated by commodity-related equities and automakers also provided a boost. Germany advanced 0.9% at 7,944.21, France also added 0.9% at 6,009.16, and the U.K. gained 0.6% to 6,624.40.

Dutch digital map data provider Tele Atlas was a notable gainer, jumping 31.1% after Dutch handheld navigation-system developer TomTom offered 2 billion euros ($2.8 billion), to buy the firm. TomTom rose 11%. Norwegian oil-rig company Seadrill rose 5.2%, while Acergy SA, oil services provider, gained 3.5%. Oil-services companies rallied after Transocean agreed to buy rival GlobalSantaFe Corp. for $17 billion.

In Frankfurt automakers DaimlerChrysler gained 2.7%, while Volkswagen rose 1.3%. In the banking sector, shares of Depfa Bank jumped gained 12% after Hypo Real Estate agreed to buy it for 5.7 billion euros ($7.9 billion).

In Paris Peugeot Citroen SA, Total SA and Michelin & Cie were leading advancers. Peugeot gained 1.8% on broker upgrade. Oil company Total also gained 1.8%. Tiremaker Michelin increased 2.8%.

In London the energy sector posted gains, with shares of oil giant Royal & Dutch Shell up 1.1%. On the financial sector, Friends Provident shares climbed 7.8% on news that the company and fellow insurer Resolution were in merger talks. Shares of Resolution added 1.1%. Among other U.K. insurers, Legal & General rose 2.7% and Prudential up 1.4%. Barclays advanced 3% after it agreed to sell a 19% stake to China Development Bank and Singapore''s Temasek Holdings in order to fund an improved bid of 67.5 billion euros for Dutch bank ABN Amro.


[R]11:30AM U.S. market averages rallied, boosted by merger deals. Opsware surged 36%.[/R]

U.S. market averages rallied in late Monday trading, driven by several multibillion-dollar deals in various sectors. Opsware ((OPSW)) surged 36% after Hewlett-Packard ((HPQ)) said it will buy the automation software maker for $1.6 billion to enhance its portfolio of business technology optimization software. United Rentals ((URI)), equipment rental company, gained 2% after it agreed to be taken private by Cerberus Capital Management for $6.6 billion.

Oil service stocks continued to posted solid gains, benefiting from news that GlobalSantaFe ((GSF)) and Transocean ((RIG)) agreed to merge in order to create a combined company with an estimated enterprise value of $53 billion. The networking sector also showed considerable strength, helped by 6% advance in the shares of Tellabs ((TLAB)) amid reports that the company will get a $7 billion takeover offer from Nokia Siemens.

Wireless, pharmaceutical, and utilities stocks also moved to the upside, while some healthcare provider and natural gas stocks bucked the upward trend. In late morning trading, the Dow Jones industrial average rose 113.24, or 0.82%, to 13,964.32. The Standard & Poor''s 500 index rose 12.90, or 0.84%, to 1,547.00 and the Nasdaq composite index rose 17.43, or 0.655, to 2,705.03. Bonds were little changed, with the yield on the benchmark 10-year Treasury note flat at 4.95% from late Friday.


[R]9:45AM Wall Street opened higher, lifted by strong earnings at Merck and Schering-Plough.[/R]

Wall Street opened higher, benefiting from robust profits in the pharmaceutical sector and news of a takeover in the oil services industry, financial and equipment-rental sectors.

The Dow was led higher by drug giant Merck ((MRK)) which rose 6% after it posted better-than-expected 12% earnings increase in Q2 and lifted its annual earnings forecast. Rival Schering-Plough ((SGP)) added 1% as both its quarterly revenue and earnings beat expectations.

Barclays ((BCS)) improved its offer for ABN Amro ((ABN)) to $93 billion and added a cash portion to it. ABN shares added 0.4%. In other deal news, United Rentals Inc ((URI)), equipment rental company, agreed to be taken private by Cerberus Capital Management for $4 billion. Shares of United Rentals rose 2%.

Further in M&A action, Hewlett-Packard ((HPQ)) said it will buy automation software maker Opsware Inc. ((OPSW)) for about $1.6 billion. The computer company said the deal will enhance its portfolio of business technology optimization software. The Dow Jones industrial average was up 72.27 points, or 0.52%, at 13,923.35. The Standard & Poor''s 500 Index was up 7.84 points, or 0.51%, at 1,541.94. The Nasdaq Composite Index was up 8.12 points, or 0.30%, at 2,695.72.


[R]9:00AM Buyout news and strong earnings boost pre-market mood.[/R]

U.S. stock futures moved to the upside on Monday, boosted by a multibillion-dollar deal in the oil drilling sector as well as stronger-than-expected earnings from drug makers Merck and Schering-Plough.

In buyout news, Transocean and GlobalSantaFe said that they agreed to combine to form a $53 billion drilling contractor. Further in M&A action, United Rentals ((URI)) agreed to be taken private by affiliates of Cerberus Capital Management LP in a $4 billion cash deal. The stock gained 2.7% in pre-market trading. In deal speculations news, Tellabs ((TLAB)) climbed 18% amid reports that Nokia Siemens Networks, the venture between Nokia ((NOK)) and Siemens ((SI)), is offering between $16. and $17 a share for it.

On the merger news front, Pharmaceutical giant Merck ((MRK)) climbed 4.5% in pre-open trade amid 12% increase in Q2 profit. Schering-Plough ((SGP)) rose 3.7% after it said its Q2 profit more than doubled. American Express ((AXP)) and Texas Instruments ((TXN)) are expected to release financial results later on Monday. S&P 500 futures rose 4 points at 1,549.10 and Nasdaq 100 futures tacked on 2.25 points at 2,057.50. Dow industrial futures climbed 32 points, helped by the Merck results.


[R]8:15AM Transocean and GlobalSantaFe agreed to merge to form a $53 billion drilling contractor.[/R]

Transocean, Inc. ((RIG)) and GlobalSantaFe Corp. ((GSF)) announced an agreement to merge to form a $53 billion drilling contractor. Under the terms of the deal, Transocean shareholders will receive $33.03 in cash and 0.6996 shares of the combined company for each Transocean share they hold. At the same time, GlobalSantaFe stockholders will get $22.46 in cash and 0.4757 shares of the combined company for each GlobalSantaFe share they hold.

The new company will be named Transocean. It will retain principal offices in Houston and trade on the NYSE under the RIG symbol. After the completion of the merger, GlobalSantaFe''s Chairman Robert Rose will become chairman of the new company while Transocean current CEO Robert Long will keep the same position in the merged firm.


6:00PM Mumbai, 10:00AM New York – Sensex in India at yet another record on infrastructure stocks and IPO listing.

Sensex in India continued its climb led by real estate and earnings driven stocks. Sensex closed up 166.65 or 1.1% to 15,732.20. Early morning trading was weak on the worries of the declines in Asian markets. In the afternoon trading averages recovered with the optimism on earnings sales from industrial and infrastructure companies.

Of the stocks traded on BSE, 1,303 stocks gained, 1,278 declined, and 77 stocks were unchanged. Trading volume on the exchange declined nearly 18% to 4,825 crore rupees (or $1.2 billion) from 5,791 crore rupees.


Gainers

Larsen & Toubro jumped 7.4% to 2,659 rupees on an upgrade from a broker and optimism that finance ministry will release more funds for infrastructure projects. India with more than $220 billion foreign exchange reserve has pledged $5 billion to improvement of roads, ports and highway networks. The poor infrastructure is limiting the economic growth and creating logistics and production bottlenecks. L&T reported a week ago that its orders in the previous quarter jumped 30%.

GMR Infrastructure soared 9% to 960 rupees. Three days ago company won a project to build and operate terminal for Turkish airport project worth $1.8 billion euros. The company in joint venture with Malaysian airport and Turkey based Limak Holdings won 20 years rights to operate the international terminal.

Ahead of earnings, Bharat Heavy Electrical or BHEL, surged 7.5% to 1,778 rupees on the news that the company has received orders of 1,829 crore rupees to set up three power plants in Haryana. The three power plants of 500 MW project is a joint venture among Haryana State Electric Board, National Thermal Power Corporation, and Indraprastha Power Generation.

Hindustan Unilever jumped 4.5% to 203.10 rupees after the company plans to buyback its shares and ahead of its earnings a week from today.

Makers of scooters and automobiles increased on the hopes that rates are not likely to rise at least for a while. Baja Auto jumped 4.2% to 2,425 rupees, Maruti Udyog increased 0.9% to 835 rupees, and Tata Motors increased 0.7% to 772 rupees.

Infrastructure and real estate stocks participated in the rally. Mahindra Gesco soared 6.4% to 631 rupees, DLF jumped 4.1% to 673.05 rupees, and Unitech increased 2.2% to 576.5 rupees.


Decliners

Generic drug maker Cipla fell 4.9% to 191 rupees after the company reported first quarter profit drop of 30% from a year ago to 120 crore rupees on 5% sales growth to 902 crore rupees. The news dragged other companies in the sector lower. Dr Reddy’s fell 0.15% and Ranbaxys lost 0.6%.

ICICI Bank fell 1.53% to 970.05 rupees after the company reported net profit increase of 25% from a year ago to 775.08 crore rupees. Despite a decline of net interest margin to 2.3% from 2.5% a year ago, operating income rose 47% to 9,281 crore rupees.


IPO News

UTI Bank priced 14.13 million shares (or 1.4 crore shares) at $15.43 for a listing on London Stock Exchange as GDR issues. Each receipt will have an underlying value of one stock. The stock priced at a discount to the market close price of Friday lowered the stock 3.8% to 624 rupees.

Suryachakra Power Corporation priced its share in the IPO at 20 rupees. The issue was oversubscribed 2.2 times and traded on its first day 6.1 crore shares. The issue gained 14% to 22.82 rupees on the first day of trading.