Takeover talk boosts stocks across Europe, Asia

Stocks rose for a second day in Europe and Asia on takeover speculation after UK pub owner Mitchells & Butlers Plc received a merger proposal and speculation that an offer may be made for German builder Hochtief AG.

Mitchells & Butlers climbed to a six-week high in London after Punch Taverns Plc approached its rival, while Fortescue Metals jumped in Sydney. ITV Plc, the United Kingdom's biggest commercial broadcaster, and Hochtief AG, Germany's largest builder, also rallied on bid speculation. Vestas Wind Systems A/S led industrial stocks higher after the world's biggest wind-turbine maker lifted its 2007 earnings forecast.

"People are doing deals and that will be supportive of the market," said Julian Chillingworth, who helps oversee $25 billion as chief investment officer at Rathbone Unit Trust Management in London. "There is still value to be found."

The MSCI World Index added 0.4 percent to 1,493.37 as of 10:52 am in London, and futures on the Standard & Poor's 500 Index slipped 0.2 percent.

US stocks posted their biggest weekly rally in five years last week as Microsoft Corp bid $44.6 billion for Yahoo! Inc.

Europe's Dow Jones Stoxx 600 Index added 0.4 percent yesterday. France's CAC 40 gained 0.2 percent, while Germany's DAX advanced 0.8 percent. The UK's FTSE 100 was little changed.

The MSCI Asia Pacific Index climbed 2 percent, set for the highest close since Jan 15. Japan's Nikkei 225 Stock Average added 2.7 percent.

US Treasury notes and European government bonds fell yesterday, while the risk of European companies defaulting declined, according to traders of credit-default swaps.

Mitchells & Butlers rallied 5.3 percent to 474 pence, the highest since Dec 14, after Punch Taverns, the largest UK pub landlord by outlets, approached its competitor.

Each company's investors would control half of the combined business and Mitchells & Butlers stockholders would receive a 175 million-pound cash payment, Punch said yesterday.

Mitchells, which owns the All Bar One and O'Neill's chains, said yesterday it has also received "continued expressions of interest" from other possible bidders.

"The M&A news is good and gives support to the stock market," said Salah Seddik, a fund manager who helps manage $7.3 billion at Richelieu Finance in Paris. "M&A can return to the forefront."

Hochtief advanced 6.1 percent to 73.88 euros on bid talk.

"There has been speculation the company may be approached by an unidentified Russian investor offering to pay 87 euros a share," said Norbert Kretlow, a Frankfurt-based analyst at Commerzbank, who rates the stock "add".

The company has not been approached by anyone, spokeswoman Jutta Hobbiebrunken said.

Friends Provident Plc increased 1.9 percent to 138.6 pence after the Financial Times said JC Flowers & Co is planning a new bid for the insurer.

JC Flowers may send a letter to the company's chairman as early as next week, the Financial Times reported, citing unidentified people close to the situation.

Agencies

(China Daily 02/05/2008 page16)