By Sarah Turner
European shares ended lower on Monday as weakness in the metals sector offset gains for DaimlerChrysler on the sale of most of its Chrysler unit and Nokia after the mobile phone maker upped its market-share forecast.
The pan-European Dow Jones Stoxx 600 index declined 0.2% at 388.96, with mining shares down 1.8%. Rio Tinto (LON:UK:RIO) shares fell 3.5% and Lonmin shares dropped 3.4%.
However, shares in German car giant DaimlerChrysler advanced 1.8% in Frankfurt, boosting sentiment throughout the autos sector, after private-equity firm Cerberus agreed to buy most of Chrysler Group from DaimlerChrysler for $7.4 billion. (See related article.)
Peugeot shares improved 1.1% and Renault gained 2.5%.
Nokia shares got a lift in the afternoon, along with the rest of the technology sector, after the mobile-phone maker said it has raised its market-share outlook for mobile devices for the second quarter and it now expecting market share to improve from the first quarter's 36%.
Nokia shares rose 4%, shares of competing phone- and phone-network maker Ericsson (OME:SE:ERIC.B) rose 2.5% and shares of Nokia microchip supplier STMicroelectronics advanced 1.2%.
By region, the German DAX Xetra 30 index fell 0.3% at 7,459.79, the French CAC-40 index lost 0.4% at 6,025.13 and the U.K. FTSE 100 index slipped 0.2% at 6,553.90.
Noting the Chrysler deal, Gerhard Schwarz, a strategist at HVB Corporates & Markets, said that private-equity-inspired restructuring is in full swing in Europe and remains an important driver of the equity market.
The Financial Times reported Monday that private equity firm Kohlberg Kravis Roberts has signed $122.5 billion worth of deals since January, including the takeover of TXU and British pharmacy chain Alliance Boots.
Goldman Sachs was the second most active private equity deal participant, signing deals worth $56.2 billion, the paper reported, citing data from Dealogic.
"A lot of the deals that have been rumored involve some sort of break-up or split-up. In some ways, companies are also doing this, for example Merck," he added.
After early gains, shares of pharmaceutical company Merck KgaA declined 0.7%. It agreed to sell its generic drug unit to Mylan Laboratories Inc, the Pittsburgh pharmaceutical producer, for €4.9 billion, or about $6.7 billion. (See related article.)
Silvio Berlusconi's Mediaset has led a consortium including Gestevision Telecinco, Cyrte Fund and Goldman Sachs Capital Partners in buying Telefonica's 75% stake in Endemol for €2.63 billion, or €25 a share. The consortium will bid €25 a share for the rest of Endemol.
Shares of Endemol, the producer of "Deal or No Deal" and "Big Brother," ended 0.6% lower at €24.50 as the deal was widely anticipated.
Italian banks Capitalia and Unicredit were also back under the deal microscope as Credit Suisse upgraded Capitalia to neutral from underperform amid mounting press speculation of an imminent merger between the companies.
"We upgrade Capitalia to neutral as the stock is, in our view, likely to continue trading at a premium to its fundamental fair value due to M&A speculation," said the broker.
Capitalia shares rose 1.3% while Unicredit shares were largely unmoved.
Shares of Dutch bank ABN Amro rose 0.2% after it published details of the takeover offer it rejected from a consortium led by Royal Bank of Scotland and also said it was pressing to learn when the Dutch Supreme Court would issue a key decision.
Investors punished one firm that wasn't able to strike a deal. Shares of French IT services firm Atos Origin lost 13.8%, weighing on sentiment in the broader French market. The firm said it has ended all third-party talks after it didn't receive any binding offers for the business.
Turning to earnings and sales updates, shares of German construction firm Bilfinger Berger rose 1.5% after it swung to a first-quarter profit of €7 million, while French advertising firm Havas saw its shares rise 4.9% after posting a 3.2% rise in organic revenue in the first quarter of 2007.
On the downside, Deutsche Postbank shares lost 1.7%. First-quarter net profit inched up to €144 million, from €133 million a year ago.
"Postbank today reported disappointing results across the board. These results demonstrate that earnings potential from the bank's volume growth had been over estimated," said analysts at Dresdner Kleinwort.
And shares in Sweden's Securitas (OME:SE:SECU.B) slipped 5.9%. The cash-handling and technology company said the listing of Loomis Cash Management will be delayed to beyond 2007 because a new stock take is required. A 15% rise in first-quarter net profit to 518 million Swedish krona couldn't lift sentiment towards the stock.
Write to Sarah Turner at firstname.lastname@example.org