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Europe: M&A "boom" dominates share trading as oil leads gains

[LONDON] Mergers and acquisitions dominated European share trading on Tuesday, while strength in oil stocks after a pipeline shutdown helped lift a key regional benchmark index to five-week highs.

The pan-European Stoxx 600 index climbed 0.7 per cent to its highest level since Nov 9, while euro zone blue chip stocks rose 0.4 per cent, helped by a late drop in the euro.

Gemalto surged 34.6 per cent after French tech consultancy Atos tabled an all-cash bid valuing the Dutch cybersecurity company at 4.3 billion euros.

Gemalto shares, which have been dented by four profit warnings in a year, led gainers on the Stoxx on Tuesday and helped the tech sector bounce 1.7 per cent. Gemalto's shares ended at 45.6 euros - just below the bid price.

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Gemalto has until Friday to review the unsolicited bid, which Atos hopes will boost its digital security credentials. Atos shares rose 7.1 per cent to the top of the CAC 40.

In other deal-driven moves, Unibail-Rodamco declined 4.1 per cent after the French commercial real estate group offered to buy shopping mall owner Westfield Corp for US$16 billion.

"Year ends with M&A boom on French market," wrote Kepler Cheuvreux analysts.

"While the acquisition of Gemalto is not the straightforward one we expected, Atos's management has a strong track record for turning around companies," they added.

Unibail's acquisition of Westfield would help it "finally" get US and UK exposure, Kepler said.

Oil stocks rallied after oil prices rose above US$65 a barrel for the first time since mid-2015 following a shutdown of the UK's biggest North Sea oil pipeline.

The oil and gas sector, which has been the worst-performing this year, jumped 1.6 per cent.

Dialog Semiconductor rose 4.6 per cent, with one trader pointing to a report that the company's chips were to be used in Huawei's Mate 10 Android smartphones.

Dialog's shares have plummeted this year due to concerns over its reliance on top customer Apple, which could in-source its power chip production.

"The power chip in Huawei is a fast charging solution, and it's a new play for (Dialog) as far as a new customer," said Lee Simpson, analyst at Stifel.

"But it's a difficult story to fully embrace given your 75 per cent customer is leaving the building," he added. Stifel downgraded Dialog to "hold" from "buy" earlier on Tuesday.

Genmab fell 6.2 per cent after it flagged 2018 expense growth of 40 to 50 per cent due to pipeline investments.

South African retailer Steinhoff meanwhile jumped 22.8 per cent, which still left its shares at around a quarter of their price before accounting irregularities emerged.

PostNL gained 4.4 per cent after JP Morgan upgraded the stock to "overweight", saying it offered attractive dividend prospects.

REUTERS