Europe Markets: Fiat surges and Peugeot plunges on plan to merge

This post was originally published on this site

Fiat Chrysler Automobiles shares surged while Peugeot plunged in otherwise listless European stock markets on Thursday.

Fiat Chrysler FCA, +8.52%  jumped 9.6% while Peugeot UG, -12.59%   fell 12.1% as the two companies said they would come together in a 50-50 merger, with FCA shareholders also getting a special dividend of 5.5 billion euros and Peugeot distributing its 46% stake in car parts supplier Faurecia EO, -4.08%   to its shareholders. Faurecia shares fell 3.8%.

“Adjusted for differences in market cap and distribution, we estimate PSA is paying a 32% premium to take control of FCA and its shareholders assume more market risk,” said analysts at Jefferies.

Renault RNO, -4.04%  , which previously tried to merge with Fiat, fell 3.4%.

After closing Wednesday at its second-highest level of the year, the Stoxx Europe 600 SXXP, -0.73%  dropped 0.32% to 397.43.

The German DAX DAX, -0.88%  dropped 0.46% to 12850.90, the French CAC 40 PX1, -0.81%  dropped 0.39% to 5743.43 and the U.K. FTSE 100 UKX, -1.09%  declined 0.61% to 7286.40.

It was the first opportunity in Europe to react to news the U.S. Federal Reserve cut interest rates by a quarter-point, and that Chairman Jerome Powell said interest rates wouldn’t increase until inflation increased substantially. China doubts that a long-term trade deal can be reached with President Trump, according to a report from Bloomberg News, and this pressured stocks.

Of movers in Europe, chip equipment maker ASM International ASM, +8.16%  surged nearly 8% as it reported stronger new order growth than it had guided for alongside a 37% increase in profit during the third quarter.

Eutelsat Communications ETL, -11.75%  fell 11.9% as the satellite operator reported a worse-than-forecast 6% drop in comparable sales growth during the first quarter and the company’s CFO told investors there’s a higher likelihood fiscal year revenue will be at the lower end of its estimates.

Air France-KLM AF, -3.48%  fell 4.7% as the airline reported a sharp drop in third-quarter profit, with its operating profit lagging analyst forecasts. The airline also said fourth-quarter unit revenue would fall.