A little ode to Foreigner’s tune “Hot Blooded” this afternoon. Monday morning’s corporate news flow is all about mergers and acquisitions.
If you’re wondering why London-listed Standard Life Plc is up 6.16% this morning, it’s because they just opened up talks to buy Aberdeen Investment, one of the most historic Scottish mutual fund firms and probably managers of a fund held by a client or two. The financial industry is changing, and even with the rollback of regulations on the table here in the U.S., big asset managers are shedding jobs due to automation and competition from passive funds. Standard Life and Aberdeen is a marriage of circumstances. Plus, they’re in the same neck of the woods over in the U.K..
Within continental Europe, General Motors’ struggling Opel sedan unit finally found a home. The PSA group, the French owners of Peugeot, confirmed today that it is buying Opel. Peugeot rose 2.8% in France while GM shares fell by 2.17%. Opel has been deadweight for GM for years. GM is underperforming the S&P 500 and Ford and even Tesla this morning by wide margins.
The value of the GM deal is put at 2.2 billion euros. The deal gives the PSA group a competitive edge in their core market, and also in other non-core markets, primarily in Eastern Europe and Russia. But the transaction is also a good decision for GM as the firm was losing money in Europe and failed to meet break-even in 2016, reportedly losing nearly $9 billion since 2009.
The near-term outlook for growth in the E.U. has improved despite persistent political uncertainties, Fitch Ratings said in its latest Global Economic Outlook.
“Labor markets and consumer spending, more supportive fiscal policies and the stabilization in emerging markets helped advanced country growth recover in the second half of 2016,” said Brian Coulton, Chief Economist at Fitch. An overall improvement in manufacturing business surveys across Europe last week suggests year-ending growth momentum has continued into 2017.
Advanced economy growth is expected to pick up to 1.9% in 2017 and 2% in 2018 from 1.6% in 2016. The acceleration is led by the U.S., but growth in the euro-zone is expected to be stable.
The Vanguard FTSE Europe (VGK 66,41 +0,11 +0,17%) fund is probably the cheapest way to take a broad, top-down approach into Europe without having to pick your spots. The top five holdings include Nestle, Novartis, HSBC, Roche Holding and Royal Dutch Shell. A clue here: Novartis is rumored to be in talks to acquire French biotech company Genfit (Unfortunately, we could not get stock quote OTC: GNFTF this time.). Look how Genfit reacted to this rumor on Feb. 28. The stock is up 36% this year as a result.