Bouygues Plans to Make Bid for Engie's Technical Service Provider Equans
Topic of the day
French construction-and-media conglomerate Bouygues SA (+1,1%) intends to make an independent bid for Equans in early September, its Chief Executive Officer Olivier Roussat said Thursday. Bouygues was initially considering a bid for Equans in partnership with U.S. private equity firm Apollo Global Management Inc., according to sources close to the company quoted last month by French financial media group L’Agefi. Equans is owned by Engie SA and was launched this year as an independent business managing most of Engie's services-led activities in 17 countries. French utility company Engie previously said that Equans combines activities that have 12 billion euros ($14.13 billion) in revenues. During its results call in July, Engie said it was continuing to "examine all options" regarding the evolution of the shareholding structure of Equans. Other parties interested in a deal for Equans include French construction-and-concessions group Eiffage SA (+2%) as well as a joint bid from French energy company Spie SA and U.S. private equity company Clayton Dubilier & Rice.
The Swiss stock market performed best in Europe on Thursday. Nevertheless, the gain of 0.4 percent was rather moderate. Contributing to the recovery were those shares that had dragged the index down the previous day, heavyweights Nestle, Novartis, Roche and ABB, which rose by up to 1.0 percent. Moderate losses were seen in the two bank stocks Credit Suisse and UBS, which had still been firm the previous day. The SMI went out of the day at 12,409 points. Almost at the bottom of the leading index ranked Lonza (-0.6%). Here, the news apparently caused some disappointment that the company will get a new Chief Financial Officer (CFO) on December 1, because the previous one is moving to Softwareone. Softwareone shares rose by 4.3 percent. In the second tier, Stadler Rail (+3.2%) benefited from an upgrade to "Overweight" by analysts at JP Morgan. They expect positive impetus from the economic stimulus packages and the transport turnaround towards green mobility. The rail vehicle manufacturer is at a turning point, they said, as they expect the first positive cash flow since the IPO in 2019 in the second half of the year.
European stocks suffered broad losses Thursday, as investors remained cautious ahead of a Federal Reserve gathering and as persistently high Covid-19 cases worldwide weighed on travel-related shares. Miners were also under pressure with commodities prices, particularly oil, in the red. "Risk assets have done well this last week and as we go into the Fed event, there is some profit taking," said Shaniel Ramjee, multiasset fund manager at Pictet Asset Management. "No one can honestly say they know what's going to happen, this uncertainty will put some reduction on risk.“ JPMorgan said forecasts anticipate an acceleration in global growth in the third quarter but incoming data across the globe suggests the economic recovery is losing traction. China policy tightening, the Delta variant and persistent supply-side constraints are factors contributing to this deceleration, the bank said. "While it is still likely that global growth remains well above trend, risks for the second-half forecast for global GDP to grow nearly 3% above its potential pace are now skewed to the downside.“ Shares in DWS Group fell 13.7% Thursday due to being under investigation by U.S. authorities over potential overstated efforts on environmental and other issues. DWS, a $1 trillion asset manager, is being probed by the SEC and federal prosecutors after its former head of sustainability said it overstated efforts to use sustainable investing criteria to manage its assets, the Journal reported, citing people familiar with the matter. Deutsche Bank 8-2.3%) owns a roughly 80% stake in DWS. Vivendi stock climbed more than 4% after Universal Music Group's inaugural capital-markets day. The event provided the kind of color that should boost confidence in its prospects as a separately-listed entity, though the value "is only part of the story" for parent company Vivendi, said analysts at Citi. UMG's long-term prospects support the EUR35 billion--or more--valuation suggested by recent transactions, and consensus forecasts could even see minor upgrades following the investor update, said Citi. While September's planned listing should be smooth, uncertainty remains around related tax considerations and the value of Vivendi's other assets, added Citi. It has maintained a neutral rating on the French media group and a EUR30.50 target price.
U.S. stocks wobbled Thursday, snapping a streak of gains and backing away from records hit earlier in the week. The S&P 500 declined 26.19 points, or 0.6%, to 4470.00, bringing an end to its recent streak of gains and retreating from Wednesday’s all-time high. The Nasdaq Composite dropped 96.05 points, or 0.6%, to 14945.81, and the Dow Jones Industrial Average lost 192.38 points, or 0.5%, to 35213.12. Heading into the end of the week, money managers say their focus is largely on comments expected from Federal Reserve officials on Friday that could offer cues on the central bank’s plans for tapering stimulus measures. Among individual stocks, Salesforce.com rose $6.94, or 2.7%, to $267.79 after the business-software company reported a jump in quarterly sales and raised its full-year outlook on Wednesday evening. Home-goods retailer Williams-Sonoma jumped $15.94, or 9.3%, to $186.68 after increasing its quarterly dividend and share-buyback program. Software developer Autodesk fell $32.08, or 9.4%, to $310.19, posting its biggest one-day percentage decline since April 2020, after it delivered guidance for third-quarter earnings that came in below analysts’ estimates. Zoom Video Communications added $2.89, or 0.9%, to $340.63 after an equity research analyst at Morgan Stanley raised their rating on the stock.
At the end of the week, no consistent trend can be discerned on the stock exchanges in East Asia. The Chinese central bank (PBoC) injected 50 billion yuan (equivalent to 6.6 billion euros) into the country's banking system on Friday via a so-called reverse repo transaction. This is supporting the Chinese stock markets. In both Shanghai and Hong Kong, share prices are up an average of 0.5 percent. Meanwhile, the Nikkei 225 index in Tokyo dropped by 0.5 percent.
The 30-year Treasury yield slipped, while the 10-year rate was unchanged, on Thursday after an auction of $62 billion in 7-year Treasury notes produced mediocre results. The 10-year Treasury note was yielding 1.342%, unchanged versus Wednesday at 3 p.m. Eastern Time.
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