Goodyear Acquires Cooper Tire for $2.8 Billion
Topic of the day
The US tyre manufacturer Goodyear is strengthening itself with a multi-billion dollar acquisition. As the company announced, it is taking over Cooper Tire & Rubber Co. The deal values the company at around 2.8 billion US dollars. Cooper Tire shareholders will receive $41.75 per share in cash and 0.907 Goodyear shares. This corresponds to a price of 54.36 dollars per share. Goodyear is paying a 24 per cent premium to Cooper Tire's 30-day volume-weighted average price. The transaction is expected to close in the second quarter and is expected to be immediately accretive to Goodyear's earnings per share. The group expects synergies of approximately $165 million two years after closing. Cooper, founded in 1914, is the fifth largest tyre manufacturer in North America by sales with approximately 10,000 employees in 15 countries.
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The Swiss stock market ended trading at the beginning of the week slightly down. The SMI was buoyed by financial stocks. Inflation concerns and rising bond yields, however, weighed on sentiment. With higher yields, bonds are becoming more attractive and provide an alternative to riskier equities. The SMI lost 0.1 per cent to 10,697 points. Among the 20 SMI stocks, there were ten price losers and nine price gainers, with Zurich Insurance closing unchanged. 38.4 (previously: 50.59) million shares were traded. Credit Suisse (+1.5) led the SMI. UBS gained 1.3 percent. Swiss Re (+1.1%) was also supported by analyst comments. Jefferies was disappointed with the full-year figures for 2020. However, the management forecast for the combined ratio was encouraging. Moreover, there is reason to believe that future renewal rounds will not result in lower premiums. Meanwhile, cyclical stocks were increasingly on investors' sell lists. Lonza, for example, fell 1.6 per cent. The two luxury stocks Richemont and Swatch fell by 0.7 and 0.5 per cent respectively. SGS was the day's loser, down 2.0 per cent. Among the second-line stocks, Kühne & Nagel (+2.2 per cent) was in focus. The group is acquiring the Chinese logistics company Apex International Corp for an undisclosed amount.
European equity markets ended Monday's trading session down slightly as investor concerns about possible accelerating inflation overshadowed the release of reassuring economic indicators. The Stoxx Europe 600 index lost 0.4% to 413.1 points. In Paris, the CAC 40 and the SBF 120 each lost 0.1%. In Frankfurt, the DAX 30 declined by 0.3%, while the FTSE 100 in London lost 0.2%. Icade (+4.5%) expects a 3% increase in its net current cash flow (CFNC) per share this year as well as a 3% increase in its dividend to be paid in 2022. Faurecia (-4.7%) wants to return to profitability close to pre-crisis levels in 2021 and has set itself a roadmap up to 2025, while its annual results have been adversely affected by the pandemic in 2020. The pharmaceutical group Sanofi (-0.9%) and its partner GSK (-0.8% in London) announced Monday the launch of a new phase II study devoted to their experimental recombinant protein vaccine with adjuvant against Covid-19. The British air transport group International Consolidated Airlines (IAG) gained 7.5% in London after announcing that British Airways had taken measures to increase its cash flow by 2.45 billion pounds sterling (2.83 billion euros). The British banking group HSBC (+1.8% in London) was buoyed by press articles on its withdrawal from the US retail banking market.
Wall Street was mixed at the start of the new trading week. Technology stocks in particular were under considerable selling pressure. Meanwhile, the Dow Jones index recovered from initial losses. The Dow Jones index closed 0.1 per cent higher at 31,521 points, while the S&P 500 fell by 0.8 per cent. The technology-heavy Nasdaq composite was down 2.5 per cent. There were a total of 1,568 (Friday: 2,133) gainers and 1,709 (1,082) losers. Sixty (96) stocks closed unchanged. Among individual stocks, Raytheon fell 1.7 per cent after a United Airlines Boeing 777-200 suffered an engine failure over the weekend. All planes powered by the same engines made by Pratt & Whitney - which is part of Raytheon - must be inspected by the US Federal Aviation Administration and grounded for the time being. Boeing closed 2.1 per cent lower. Airline stocks, meanwhile, benefited from a positive analyst commentary from Deutsche Bank, which advises investors to buy the sector. The development of new corona infections and progress in vaccinations were "heading in the right direction". American Airlines jumped 9.4 per cent, Southwest Airlines gained 3.7 per cent, Delta Air Lines was up 4.5 per cent and Alaska Air Group was up 2.1 per cent. United advanced 3.5 per cent despite the weekend incident. Apple slipped 3.0 per cent. Bill and Melinda Gates' foundation halved its stake in the iPhone maker in the fourth quarter of last year, according to a recent filing with the US Securities and Exchange Commission. The foundation even exited Alibaba (-3.6%) and Uber (-5.3%) altogether. Discovery Inc's A-share jumped 8.9 per cent after the entertainment company surprised on the upside with its fourth-quarter results and gave a compelling outlook. Tesla shares were trading 8.5 per cent lower.
The stock markets in East Asia and Australia show a friendly trend on Tuesday. Most indices recovered from initial price losses. The Kospi in Seoul is currently down by 0.2 per cent, after already being up again. The indices on the Chinese stock exchanges also recovered from their initial losses. The Shanghai Composite is up 0.6 per cent and the Hang Seng Index is up 1.7 per cent. Tokyo is closed today in honour of Emperor Naruhito's birthday.
Yields continued to rise on the bond market. Ten-year US bonds yielded 1.3 basis points higher at 1.35 per cent.
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