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Tuesday 02nd of December 2008
November 16, 2006

M&A rumors help European auto sector


by Elaine Frei

The FTSE Eurofirst 300 ended the session Thursday 0.2 percent higher to 1,473.84, its highest close in five and a half years, buoyed by gains in the automobile manufacturing sector.

Stock exchanges were mixed on the session, with Euronext 1.1 percent higher to €85.95 on a third quarter report that was about as expected, while Deutsche Borse fell 0.7 percent to €124.06 after dropping plans to merge with Euronext.

In the semiconductors sector, Infineon dropped 2.3 percent to €9.57 after warning of lower sales and earnings in the current quarter, after its fourth quarter operating profits were lower than had been hoped after a key customer went bankrupt.

In the cars and trucks sector, MAN reasserted its hostile bid for Scania, despite repeated rejections. Volkswagen, the largest shareholder in both companies, will hold a board meeting later in the day to consider the offer. There were also rumors that Scania would submit a counter bid for MAN. Porsche, meanwhile, was said to be thinking of bidding for Volkswagen after having already said it would increase its holding in VW.

Everyone involved in this M&A dance benefited, with the exception of Scania, whose B shares dropped 2 percent to SKr465.50. Volkswagen added 1.5 percent to €85.50, while MAN gained 3.6 percent to €73.64 and Porsche was 4.7 percent higher to €921. There were also gains elsewhere in the sector, as Renault was up 0.9 percent to €97.85, DaimlerChrysler added 1.9 percent to €48.41, and Peugeot gained 3.4 percent to €49.77.

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