Worldpay, M&A in focus as European shares consolidate, Wall Street on break

[LONDON] A spate of dealmaking news swept European stocks on Tuesday, with Worldpay soaring after bid approaches, helping mitigate a broad based pull back from the previous session's strong gains.

The pan-European Stoxx 600 fell 0.3 per cent, in line with a dip in euro zone stocks and Britain's FTSE index.

On Monday, European shares had their strongest day since April 24, when Emmanuel Macron won the first round of France's presidential election.

The closure of the US market for the July 4 national holiday also meant volumes were lower than usual.

"Today is a consolidation day after gains yesterday, as we don't have a US market," said Angelo Meda, head of equities at Banor Capital.

But dealmaking was back with a vengeance as a key driver of individual share moves.

Payments company Worldpay shares soared 27.7 per cent to a record high after it received rival takeover approaches from credit card tech firm Vantiv and JPMorgan.

This came after Danish rival Nets said on Monday it had received offers. Nets and another German rival Wirecard rose more than 4 per cent.

"This is one of the most intriguing sub-sectors in the financials space. There are a lot of companies still, and we are probably going to have only one or two big leaders in the payments space," said Mr Meda.

EDP was a top gainer, up 1.6 per cent after Spain's Gas Natural was reported to have approached the Portuguese utility for a US$40 billion merger which would create Europe's fourth biggest utility by market capitalisation.

Gas Natural shares fell 0.6 per cent. EDP denied negotiations were taking place.

Shares in French rival EDF also dropped 4 per cent after HSBC downgraded the stock to "reduce".

Clariant shares gained 3 per cent after two activist investors upped their stake in the Swiss chemicals firm in opposition to a planned merger with US firm Huntsman.

Baader Helvea analysts said the move could make a counterbid more likely.

And the prospect of suitors Bain and Cinven getting regulatory approval for a renewed offer for Stada sent the generic drugmaker's shares up 2.2 per cent.

Italian stocks outperformed as banks rallied more than one per cent to a 15-month high after the country's ninth-biggest lender Carige approved a 500 million euros (S$785 million) cash call to beef up its balance sheet.

"This was the last piece of the puzzle which we needed to fix, in order to have a recovery in credit and profitability in banks... It's not yet in the prices, because the market still wants to see non-performing loans problems being solved," said Mr Meda.

A further boost to the sector came from news that the European Commission gave its blessing to a state bailout of Monte dei Paschi di Siena, paving the way for a deep restructure of the troubled lender.

REUTERS