Novartis and Nestle in $39 B Deal

123jump.com Staff
07 Apr, 2008
New York City

European stocks edged higerh after Novartis agreed to purchase a stake in eye care unit of Nestle, J C Flowers pursued Friends and Provident and French railroad company SNCF bid 1.1 billion euros for logistics company Geodis. The deal news lifted stocks across the region. Banks and mining stocks gained after analysts recommended UBS and Anglo American.

[R]10:00PM Frankfurt, 4:00PM New York, 8:00AM Sydney – European markets rose after merger news dominated the trading sentiment.[/R]

Global Markets Update

In Zurich trading, Novartis agreed to purchase 25% stake for $11 billion in Alcon, eye care unit of Nestle and pay at a later date 52% for about $28 billion. The deal lifted Nestle by 1%. Geodis SA in Paris trading surged 30% after SNCF, a French railroad company bid 1.1 billion euros.

Separately, UBS jumped 6% after Merrill Lynch recommended raised stock rating to ‘buy’ from ‘hold’ and said that investors will come to appreciate UBS business franchise strength. Anglo American in London trading jumped 4% after Goldman Sachs added the stock to its recommended list and set a target price of 3,945 pence. The news of ratings revisions was first reported on Bloomberg news.

German industrial production rose 0.4% in February after rising 1.4% in January. The seasonally adjusted data was higher than what most economists had expected a decline of 0.3% or more. Construction output rose 3.7% in the month. Separately, BDB, German banking association kept its annual growth forecast to 1.6% and cited strong exports to Asia and Middle East.

U.S. stocks lost most of the gains in the morning trading after crude oil and gasoline surged and investors turned cautious ahead of earnings release from Alcoa. After the close Alcoa reported lower than expected earnings.

Washington Mutual, battered mortgage lender rebounded after talks of capital injection of $5 billion. The private equity investment led by TPG may take stake up to 24% in the company. WaMu stock soared 22% after it lost nearly 75% of its value in the last nine months of trading.

Motorola agreed to appoint key adviser to Carl Ichan on its board immediately and nominate WR Hambrecht at the upcoming meeting of shareholders. Ichan will drop all litigation and not solicit additional information ahead of annual shareholder meeting. Motorola, in an apparent set-back will look for advice from hostile investor Ichan in selecting top executives at Motorola and soon to be separated its mobile phone unit.

Stocks in Hong Kong closed higher after a week of losses on a rise in commodities and earnings from Sinopec. In Hong Kong trading Hang Seng Index rose 1.29% or 314.13 at 24,578.76, and China Enterprises Index of Hong Kong-listed mainland companies, or H shares, edged up 2.15% or 282.31 at 13,419.88.Sinopec stock increased 2% after it reported 2007 net income rise of 5.5% on revenue gain of 13.4% on higher gas and oil revenue. In Shanghai trading CSI 300 advanced 5.34% or 195.12 at 3,845.82.

Stocks in Japan rose after the release of index of leading indicators and on rising commodities prices. In Tokyo trading Nikkei 225 gained 1.18% or 157.01 at 13,450.23. Nippon Mining House led gainers in the Nikkei 225 index shares with a rise of 8.9% on the rise in commodities prices. OECD urged Japan not to raise interest rate as consumer remains weak. Masaaki Shirakawa was nominated by the Prime Minister to lead the central bank.

Mumbai stocks rose sharply after Sebi said that it is considering in streamlining dual stock listing on exchanges in India and other countries. Rally in commodities in the region also lifted stocks. Sensex gained 2.7% to close at 15,757 and CNX Nifty added 2.5% to close at 4,761. ICICI Bank and Ranbaxy Laboratories led the advancers in the Sensex index. However, Maruti Suzuki India and Ambuja Cements led the decliners in the index. Reliance Communication is likely to launch service in Sri Lank.

European Markets indexes

In London FTSE 100 Index closed higher 67.70 or 1.14% to 6,014.80, in Paris CAC 40 Index increased 43.72 or 0.89% to close at 4,944.60 and in Frankfurt DAX index higher 57.64 or 0.85% to close at 6,821.03. In Zurich trading SMI increased 65.81 or 0.87% to close at 7,639.30.

North American Markets indexes

Dow Jones Industrial Average gained 3.01 or 0.02% to a close of 12,612.43, S&P 500 closed up 2.13 or 0.08% to 1,372.53, and Nasdaq Composite Index decreased 6.15 or 0.26% to a close at 2,364.83. In Toronto TSX Composite closed up 65.62 or 0.48% to 13,733.81.

Of the 30 stocks in Dow Jones Industrial Average, 15 closed higher, 14 closed lower, and one was unchanged.

Alcoa led the decliners in the index with a loss of 3.9% followed by losses in Home Depot of 1.4%, in Hewlett Packard of 1.1%, in DuPont of 1.07%, and in General Electric of 1.04%. Citigroup led the gainers in the index with a rise of 1.8% followed by increases in Merck of 1.6%, and in General Motors of 1.55%.

Of the stocks in S&P 500 index, 220 stocks increased, 276 declined, and 4 were unchanged. Of the stocks in the index, 18 stocks fell more than 3% and 16 gained more than 3%.

Dillards led the decliners in the S&P 500 index with a loss of 6.2% followed by declines in Tesoro of 6%, in BMC Software of 5.3%, in International Game Technology of 4.9%, and in Monster Worldwide of 4.8%.

Wamu led the gainers in the S&P 500 index with a surge of 28% on $5 billion capital injection in the company. KLA Tencor followed with a rise of 6.55%, Wyeth rose 6.3%, and Bank of New York Mellon gained 5.8%.

South American Markets Indexes

Venezuela led the gainers in South American trading with a gain of 1.7% followed by increases in Peru of 1.2%, in Colombia of 0.6%, in Mexico with 0.2%, and in Chile of 0.13%. Brazil led the decliners in the region with a loss of 0.6% followed by losses in Argentina of 0.34%.

Asian Markets

In Tokyo Nikkei 225 Index closed higher 157.01 or 1.18% to 13,450.23, in Hong Kong Hang Seng index increased 314.13 or 1.29% closed to 24,578.76. In Australia ASX 200 index higher 5.40 or 0.10% to close 5,625.00. In Malaysia KL Composite index decreased 0.91 or 0.07% closed to 1,221.07.

In South Korea Kospi Index increased 7.07 or 0.40% to close at 1,773.56 and Indonesia JSE Index edged increased 9.71 or 0.43% to 2,286.80. Sensex index in India increased 413.96 or 2.70% to 15,757.08. Market of Thailand was closed today.

Commodities, Metals, and Currencies

Crude oil increased $2.55 to close at $108.78 a barrel for a front month contract, natural gas increased 46 cent to $9.78 per mBtu, and gasoline futures increased 2.10 cents to close at 277.77 cents per gallon.

Gold increased $13.60 in New York trading to close at $926.80 per ounce, silver closed up $0.36 cents to $18.12 per ounce, and copper for front month delivery increased 2.50 cents to 397.95 per pound.

Wheat futures decreased 57.00 cents in Chicago trading and closed at $9.34 per bushel. Sugar increased 62.00 cent to $12.19 per pound. Soybean future closed down 22.00 cents to $12.55 a bushel.

Dollar edged higher and traded near a record low against euro to $1.5704 and edged higher against yen to 102.46.

Bond Yields increased for 10-year U.S. bonds and closed at 3.56% and on 30-year bonds increased to close at 4.37%.