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Research Market strategy
by Swissquote Analysts
Morning News

RSA Insurance Agrees to $9.54 Billion Takeover

Topic of the day

RSA Insurance Group PLC said that it has agreed to a takeover offer from Intact Financial Corp. and Tryg AS which values the FTSE 100 insurer at 7.2 billion pounds ($9.54 billion) in cash. Under the deal, Intact will retain RSA's Canadian, U.K. and international operations, while its Scandinavian business will be separated. Tryg will retain RSA's Swedish and Norwegian businesses, and Intact and Tryg will co-own RSA's Danish business with each holding a 50% interest. RSA said its shareholders will be entitled to receive 685 pence in cash, which represents a 51% premium to its closing price of 460 pence a share on Nov. 4, the last business day before a possible offer by Intact and Tryg was disclosed.


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Swiss stocks

Taking the leading index SMI as a benchmark, there was little movement on the Swiss stock market Wednesday. Compared to neighbouring markets, it declined slightly despite a small rally at the end of the day, likely because the Swiss franc firmed during the day, which makes Swiss exports more expensive. The SMI fell by one point to 10,564 points. Zurich Insurance was the top gainer, rising 2.5 percent to CHF 373.30 after analysts had raised their target for the stock to CHF 415 from CHF 385. The analysts said Zurich is profiting from its position among global commercial property and casualty insurers, which in the next two or three years could lead to higher premium income growth and better claims and cost ratios than the market currently expects. Richemont slumped 1.9 percent after receiving shareholder approval Wednesday at an extraordinary general meeting for a conditional capital increase, including the issue of up to 22 million new shares as part of a shareholder loyalty scheme.

International markets

Europe

European stocks rise after Pfizer and BioNTech said final results from a late-stage trial of their coronavirus vaccine showed it was 95% effective and they would seek emergency US authorization within days. The Stoxx Europe 600 climbs 0.4%, the FTSE 100 adds 0.3% and the DAX and CAC-40 gain 0.5%. Iliad SA said Wednesday that it has received a loan of 300 million euros ($355.9 million) from the European Investment Bank to improve 4G coverage and deploy 5G in France. The French telecommunications company said it has more than 18,800 mobile sites across metropolitan France, with 4G coverage for 97.8% of the population. Institutional Shareholder Services, known for its shareholder advisory services, has a new majority owner. Deutsche Börse is buying 80% of ISS in a deal that values the firm at $2.3 billion. Private-Equity firm Genstar Capital, the seller, along with ISS management, will retain 20%, a statement said. Deutsche Börse (ticker: DB1.Germany) is financing the deal with EUR1 billion ($1.2 billion) of debt, while the rest will be cash, a spokeswoman said. The transaction is expected to close during the first half of 2021. Croda International said that it will buy Fragrance Spanish Topco – which operates as Iberchem – for EUR820 million ($972.7 million). The chemicals company said it would fund the transaction via existing debt facilities and an equity placing. Shares rose 1.8%.

United States

U.S. stocks dipped as mounting coronavirus cases forced more parts of the country to impose restrictions meant to fight the spread of the virus. The Dow Jones Industrial Average shed 1.2%, closing near its lows after coming within striking distance of a record earlier in the session. The S&P 500 fell 1.2% and the Nasdaq Composite lost 0.8%. The U.S. on Wednesday approved Boeing Co.'s 737 MAX jets for passenger flights again after dual crashes took 346 lives, issuing a set of long-anticipated safety directives and notices to airlines globally that will help resolve the plane maker's biggest pre-pandemic crisis. The Federal Aviation Administration's official order to release the MAX, grounded since March 2019, came as the beleaguered Chicago aerospace giant grapples with a host of new problems amid the continuing health crisis. The FAA's order for ungrounding allows Boeing to resume delivering the jets to airlines and lets them carry passengers, pending completion of certain mandatory fixes and additional pilot training requirements spelled out in related documents also released by the agency. Apple Inc. is halving the commission it charges smaller developers that sell software through its App Store, a partial concession in its battle with critics over how it wields power in its digital ecosystem. Starting next year, the iPhone maker said Wednesday, it will collect 15% rather than 30% of App Store sales from companies that generate no more than $1 million in revenue through the software platform, including in-app purchases.

Asia

Asian shares closed lower today, as mounting coronavirus cases on both sides of the Atlantic have forced governments to impose restrictions meant to fight the spread of the virus.

Bonds

U.S. Treasury yields edged lower in Asia, with moves in the bond market steered by speculation the Fed would have to deliver fresh aid following Jerome Powell's call on Tuesday for additional government relief to support the economy. The 10-year note yield was recently at 0.851%, down from Wednesday's 0.880%, when rates bounced off their lows as broker-dealers made room for an auction of $27 billion of 20-year bonds. Despite the rise in yields, the sale struggled to draw interest among market participants.

Analysis

UBS rises the BBVA target to 3,65 (2,75) EUR – Neutral
CS rises the Relx target to 2.085 (1.956) p – Buy
HSBC rises the Adecco target to 64 (56) CHF – Buy


Produced by MBI Martin Brückner Infosource GmbH & Co. KG on behalf of Swissquote. All news is acquired with journalistic accuracy. No liability is assumed for delays or errors.

 
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