Deals fail to lift US stocks

Deals fail to lift US stocks
Published: 30 July 2013
NEW YORK - Deal news was responsible for the two biggest movers on the S&P 500 on Monday, as advertising company Interpublic Group led the benchmark index on news of an industry merger, and Perrigo fell furthest after announcing plans to buy Elan. First, the good news. Interpublic shares rose 4.7 per cent to $16.61 as investors speculated that the merger between Omnicom and Publicis would lead to more acquisitions in the advertising field.

However, Omnicom fell 0.6 per cent to $64.75 after plans emerged for a $35bn merger with Publicis, despite opening sharply higher. The companies will be the world's largest marketing group by revenue and equity value if the deal is approved by regulators. The bad news was led by speciality pharmaceutical group Perrigo, which fell 6.8 per cent to $125.17 on news that it will buy Elan Corp for $8.6bn. The move will allow Perrigo to re-establish itself as an Ireland-based company and take advantage of lower tax rates, but comes at the cost of significant share dilution. Of the $8.6bn deal, 60 per cent of the offer comes in the form of Perrigo equity.

Despite the numerous deals, the S&P fell 0.4 per cent to 1,685.33. The Dow Jones Industrial Average lost 0.2 per cent to 15,521.97, and the Nasdaq Composite index dropped 0.4 per cent to 3,599.14. Merger Mondays usually spell a rally in US stocks, but with a week full of market-moving news - including an announcement from the Federal Reserve, a second-quarter US gross domestic product reading, and a non-farm payroll report - investors were in risk-off mood. Facebook also helped the tech benchmark, up 4.2 per cent to $35.43. The social network has risen more than 35 per cent since it reported earnings last week that showed strong mobile ad revenue and rising numbers of advertisers.
- FT
Tags: Stocks, US, Deals,


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