European Stocks Little Changed Amid Deals Action as Shire Climbs

Jun 20, 2014 11:54 am ET

June 20 (Bloomberg) -- European stocks were little changed, paring gains in the final minutes of trading, amid an increase in mergers-and-acquisitions activity.

Shire Plc surged to a record after AbbVie Inc. said the drugmaker rejected an enhanced bid of as much as 27.3 billion pounds ($46.5 billion). TSB Banking Group Plc rallied 12 percent and Euronext NV fell 2 percent on their trading debuts.

The Stoxx Europe 600 Index slipped less than 0.1 percent to 348.09 at the close of trading in London. The benchmark gauge advanced 0.3 percent this week as the Federal Reserve pledged to keep interest rates low for a prolonged period.

“I expect that M&A activity in Europe will go on till the end of the year,” Herbert Perus, who helps oversee $36 billion as head of equities at Raiffeisen Capital Management in Vienna, said by phone. “A lot of companies are sitting on a pile of cash. Some U.S. companies will get a tax advantage by buying European companies, so I expect cross-border deals to continue. We may see some volatility because of quadruple witching.”

Options and futures on European stocks and indexes expired today, increasing volatility. Changes to indexes including the Stoxx 600, France’s CAC 40, the U.K.’s FTSE 100, Spain’s IBEX and Norway’s OBX come into effect this weekend.

Benchmark Indexes

National benchmark indexes dropped in 12 of the 16 western- European markets that opened today. Markets in Sweden and Finland were closed today for the Midsummer holiday. The FTSE 100 rose 0.3 percent, Germany’s DAX slipped 0.2 percent and the CAC 40 fell 0.5 percent.

An index of euro-area consumer confidence unexpectedly fell to minus 7.4 in June from minus 7.1 in May, according to a preliminary report from the European Commission. The median estimate of economists in a Bloomberg survey had called for an increase to minus 6.5.

Shire jumped 17 percent to 4,371 pence. AbbVie said late yesterday that Shire’s board turned down three takeover proposals, the latest for an indicative price of 46.26 pounds a share. The U.S. company said it is no longer in talks. Shire extended gains after two people familiar with the matter said AbbVie is considering raising the offer again.

TSB rallied 12 percent to 290 pence in London. Lloyds Banking Group Plc raised 455 million pounds through TSB’s initial public offering. The lender sold 175 million TSB shares, or 35 percent of the company, at 260 pence a share. Lloyds increased the stake from the 25 percent initially planned because of investor demand, it said in a statement.

Alstom Bid

Alstom SA advanced 1.1 percent to 28 euros. Siemens AG and Mitsubishi Heavy Industries Ltd. raised the cash component of their offer for Alstom by 1.2 billion euros ($1.64 billion) to 8.2 billion euros, while increasing their valuation of its energy assets by 400 million euros to 14.6 billion euros, according to a statement. General Electric Co. has also bid for Alstom. The French company said its board will meet by June 23 to review the offers.

British Sky Broadcasting Group Plc gained 2.3 percent to 891.5 pence. UBS AG analyst Polo Tang wrote in a note that the company will probably reach a wholesale agreement with BT Group Plc before an auction for Premier League soccer-broadcasting rights expected in the first quarter of 2015.

Euronext slipped 2 percent to 19.60 euros in Paris. The owner of markets in Belgium, France, Portugal and the Netherlands was spun off from Intercontinental Exchange Inc. through an 845 million-euro initial public offering. ICE sold 42.2 million shares for 20 euros apiece.

Telecom Italia SpA dropped 2.6 percent to 92.7 euro cents. Telefonica SA sold 103 million euros of bonds that can be exchanged for Telecom Italia shares. The Spanish company raised 139.6 million euros, according to a spokesman.

J Sainsbury Plc dropped 1.4 percent to 316.8 pence after saying it will form a joint venture with Dansk Supermarked A/S to open 15 Netto stores in the U.K. by the end of 2015. Wal-Mart Stores Inc.’s Asda bought Netto’s 193 stores in the U.K. in 2010, converting most of them into supermarkets with its own branding. It sold others to meet antitrust concerns.