Baxter Nears $10 Billion Purchase
Topic of the day
Baxter International Inc. is in advanced talks to buy medical-equipment maker Hill-Rom Holdings Inc. for around $10 billion, according to people familiar with the matter. A deal that values Hill-Rom at around $150 a share could be reached by midweek assuming the talks don't fall apart, the people said. The talks follow an earlier bid from Baxter worth $144 a share that Hill-Rom rebuffed. Hill-Rom shares jumped in late July on news of that bid and have remained elevated, closing Friday at $132.90. Hill-Rom currently has a market capitalization of nearly $9 billion. Baxter's is around $37 billion. Chicago-based Hill-Rom, founded in 1915, makes medical gear such as hospital beds and patient-monitoring devices. Baxter is a medical-technology company based in Deerfield, Ill., that focuses on areas including critical care, nutrition and surgical products. There has been a boom in healthcare merger activity this year as companies in the industry jockey for scale and other benefits that deals bring, in many cases taking advantage of elevated stock prices used as currency.
After two days of gains, the Swiss stock market consolidated on Monday. The SMI trended little changed near its all-time high. Impulses were scarce after the end of the earnings season. The SMI lost 2 points to 12,437. Among the 20 SMI stocks, there were eleven price losers and eight price winners, one share closed unchanged. 17.32 million shares were traded (previously: 20.62 million). Swiss Re lost 1.2 per cent. The Stoxx insurers sector was one of the weakest in Europe, down 0.6 per cent. "Claims this year are probably much bigger than assumed at the renewal rounds in April," said Heino Ruland of Ruland Research. After the fires in Southern Europe, the flood disaster in Central Europe and the earthquake in Haiti, Hurricane "Ida" is now causing major damage in Louisiana, he said. The hurricane, classified as "extremely dangerous", paralysed the entire power supply of the metropolis of New Orleans. In addition, financial stocks suffered from the prospect of low interest rates. Swiss Life, for example, lost 0.2 per cent and UBS 0.4 per cent. Slight pressure on the indices came from pharmaceutical heavyweights Novartis (-0.2%) and Roche (-0.1%). Cyclicals, on the other hand, tended to be sought after. ABB rose by 0.4 per cent. Alcon was at the top of the SMI with a plus of 0.9 per cent.
After very quiet trading, Europe's stock exchanges closed with small premiums on Monday. Given the bank holiday in London and the absence of many investors, business was quiet. August data on German consumer prices were in line with expectations and did not set any accents, even though they had risen to a 28-year high. The DAX rose 0.2 per cent to 15,887 points and the Euro-Stoxx-50 gained 0.2 per cent to 4,199 points. Adva Optical surged 10.2 per cent. Adtran wants to take over Adva via a share swap. Adva shareholders are to receive 0.8244 ordinary shares in a new holding company for each share. The offer includes a 22 per cent premium to Adva's three-month average share price. The new company aims to benefit from the "unprecedented investment cycle in fibre roll-out". Cost savings are estimated at over 50 million dollars annually. In the DAX, very little happened among individual stocks. Covestro gained slightly more, 2.1 per cent. Among the second-line stocks, Encavis lost 2.4 per cent. The wind farm operator cancelled two convertible bonds. This increases the number of outstanding shares, which results in a dilution of earnings.
The broad U.S. stock index and Nasdaq notched records as technology stocks lifted major indexes. The S&P 500 rose 0.4%, while the tech-heavy Nasdaq Composite advanced 0.9% after both logged all-time highs on Friday. The Dow Jones Industrial Average edged lower by 0.2%. Technology and other so-called growth stocks led the market, after Federal Reserve Chairman Jerome Powell on Friday stressed that the central bank should not overreact to a recent jump in inflation. Contract drug manufacturer Catalent Inc. said Monday that it has agreed to buy closely held Bettera Holdings LLC for $1 billion, the latest deal involving nutritional supplement companies. The all-cash deal expands Catalent’s manufacturing capabilities for vitamins, minerals and supplements to make them in gummy form. The transaction is expected to close by the end of the fourth quarter. The deal was first reported by The Wall Street Journal on Sunday. Bettera, based in Plano, Texas, and backed by private-equity firm Highlander Partners LP, manufactures gummy, soft-chew and lozenge forms of vitamins and supplements. Bettera has about 500 employees. Doughnut maker Krispy Kreme Inc. is focusing on paying down debt and delivering fresher pastries after returning to the public markets this summer. Krispy Kreme, best known for its glazed doughnuts, went public in July, five years after it was taken private through an acquisition by investment firm JAB Holding Co. The Charlotte, N.C.-based company spent the past three years buying out franchisees, seeking to improve the quality of doughnuts sold outside its so-called hot light theater shops, where customers can watch doughnuts come fresh off the production line.
The stock markets in East Asia and Australia were very mixed on Tuesday. Negative outliers are the Chinese markets. The Shanghai Composite (-0.8%) and especially the Hang Seng Index in Hong Kong (-1.4%) are down sharply after weaker-than-expected purchasing managers' indices for the manufacturing and service sectors in China in August. The latter even slipped below the expansion threshold.
Treasury yields continued to fall in Asia, extending Monday's retreat as traders turned their attention to a crucial jobs report due this week.
IR lowers Delivery Hero to Hold (Buy) – Target 130 (140) EUR
Metzler rises Airbus target to 135 (114) EUR – Buy
Warburg lowers Fabasoft target to 50 (59) EUR – 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.