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European shares recover lost ground, boosted by M&A hopes
June 17, 2014 / 8:27 AM / 3 years ago

European shares recover lost ground, boosted by M&A hopes

* FTSEurofirst 300 up 0.3 pct

* Shire gains in anticipation of takeover offers

* Alstom extends fall after Siemens/Mitsubishi bid

* Travel and leisure mount a comeback as oil steadies

By Alistair Smout

EDINBURGH, June 17 (Reuters) - European shares edged higher on Tuesday, boosted by hopes for mergers and acquisitions among healthcare companies and rebounding from losses caused by geopolitical concerns.

Shares in British pharmaceutical group Shire rose 3.5 percent, the biggest gain on the pan-European FTSEurofirst 300, after Reuters reported that it had hired investment bank Citi as an adviser, expecting to receive takeover approaches following a wave of deals in the healthcare sector.

British peer AstraZeneca successfully resisted a takeover approach from Pfizer last month. U.S. medical device maker Medtronic agreed earlier this week to buy Dublin-based Covidiuen.

“Shire have been perennial potential bid candidate for years now,” said Jeremy Batstone-Carr, a research analyst at Charles Stanley. U.S. companies were looking for UK-based firms for tax reasons, he said.

In other M&A news, Alstom fell 1.4 percent, extending Monday’s decline in late trade, after Germany’s Siemens and Japan’s Mitsubishi Heavy Industries made a joint offer to the French turbine maker.

Siemens and Mitsubishi challenged a bid by General Electric , which was trying to work with the French government on a deal after its offer ran into political difficulty, despite being better for shareholders, according to Barclays.

“Siemens and MHI propose a complicated deal in which Siemens seems to be the only clear winner in our view ... It has the opportunity to consolidate its existing service network with that of Alstom, with the potential to reap the accompanying cost synergies,” analysts at Barclays wrote in a note.

“For Alstom, the proposal offers recapitalisation, but doesn’t solve demand issues, in our view. We continue to believe the GE deal is better for Alstom shareholders.”

By 0753 GMT, the FTSEurofirst 300 was up 0.3 percent at 1,388.51 points, retracing most of yesterday’s 0.4 percent fall.

Travel and leisure was the sector gaining the most, rising 0.8 percent after losses last week, when tension in the Middle East saw Brent hit $113 a barrel.

Investors have favoured commodities such as oil and safe havens over more risky equities as conflict in Iraq escalated.

President Barack Obama considered options for military action to support Iraq’s besieged government on Monday but made no decision on the U.S. response to a Sunni militant onslaught that has threatened to tear the country apart.

Europe bourses in 2014:

Asset performance in 2014:

Today’s European research round-up

Editing by Larry King

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