European shares rose on Monday, buoyed by a flurry of year-end M&A and expectations that a US bill lowering corporate taxes could soon pass.
Thales rose 7.6% after the French aerospace and defense company agreed to buy chipmaker Gemalto for €4.8 billion ($5.66 billion) Gemalto shares rose 5.4%, Reuters reported.
Switzerland’s UBS said the deal propelled Thales further into digital technologies and should boost its earnings by 20%. Thales said on Monday it had the financial leeway for further acquisitions.
Both stocks were among the biggest gainers on the pan-European STOXX 600 index, which rose 0.8% to its highest in nearly six weeks. Euro zone blue chips added 1.2% and the UK’s FTSE rose 0.4%.
Unilever sealed a long-awaited deal to sell its margarine and spreads business to US private equity firm KKR for €6.8 billion. The consumer goods maker fended off a $143 billion takeover attempt by Kraft Heinz this year and wants to sharpen its focus on faster-growing products.
The KKR deal creates a clearer separation between Unilever’s food and home/personal care businesses, making it easier for the company to split in two as a potential defense against a hostile takeover, said a sales trader at a European bank.
But analysts at Royal Bank of Canada stuck with an “underperform” rating on Unilever stock, pointing to acquisitions it has made over the past two years that added €2.2 billion in turnover.
“What we don’t know is how the profitability of these acquired businesses compares, but we expect that in aggregate margins will be substantially lower than the Spreads’ business’s 22.4% EBITDA margin in 2016,” they wrote in a note. Unilever shares were flat.
German real estate group Vonovia agreed to buy peer Buwog in a cash deal valuing it at €5.2 billion and sending the Austrian company’s shares up 17% to the top of the STOXX 600.
Among outstanding fallers, IG Group was down 9% after the European Union’s securities watchdog proposed curbs on core parts of its market.
Ryanair fell 4.2%. Europe’s biggest low-cost airline averted a strike by pilots in Ireland and Portugal after it agreed on Friday to recognize trade unions for the first time.
