Summary
- European indices see limited gains on Tuesday morning
- DAX (DE30) struggles to find direction at the beginning of the session
- Wirecard (WDI.DE) explores partnership with Indian hospitality chain
Start of the European session on Tuesday was quite muted with no major moves occuring at the beginning of trade. After initial mixed performance, major stock market indices from the Old Continent moved higher and added to previous gains. Osram is one of the best performing stocks in the DAX and MDAX indices following news hinting at potential start of a bidding war.
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DE30 continues to trade above the 50-, 100- and 200-hour moving average. The index experiences some volatility on Tuesday morning and struggles to find a direction. The near-term resistance can be found at 11750 pts handle, where yesterday’s daily high is localized. Slightly higher one can find short-term price zone. The nearest support level to watch is 200-hour moving average (purple line, 11645 pts at press time). Source: xStation5
Another bid for the German Osram?
Osram (OSR.DE) shares are making moves on Tuesday in response to the potential start of a bidding war for the German lighting manufacturer. Bain Capital and Carlyle Group, two private equity firms that expressed interest in acquiring Osram, said that they may raise their €3.4 billion (€35/share) bid in case rival company AMS decided to submit a formal bid. AMS is waiting for permission from Osram’s management to submit a formal €38.50/share offer. Let us recall that Allianz, Osram’s largest shareholder, opposed the offer of Bain and Carlyle saying that it is too low. However, in spite of AMS bid being higher, it raises some concerns among labor unions that control half of Osram’s Board. Namely, labour unions do not see much synergies coming from the tie-up with AMS and, in turn, question sense of the acquisition.
DAX members after the first 40 minutes of trade. Source: Bloomberg
Other company news
Wirecard (WDI.DE) is trading higher today following reports saying that OYO, Indian hospitality chain backed by Softbank, is considering using digital payments technology of the German firm. The two companies are planning to collaborate globally in the markets where OYO is present, including US, UK, EU and South-East Asia. OYO’s portfolio includes over 23 thousand hotels and more than 125 thousand vacation homes for rent.
Deutsche Wohnen (DWNI.DE), the German real estate company, is also trading higher today. The company reported that it has signed a contract to sell as much as 6350 residential units for €615 million. The contract was signed with ZBI Group and relates to real estate outside of the main German metropolitan regions. Deal value price properties at 22 times current rental income.
Continental (CON.DE) received a downgrade at the Deutsche Bank. The bank lowered recommendation for the stock from “buy” to “hold” and slashed price target from €140 to €120. Bank’s analysts cited high cost base resulting from R&D investments as the basis of a downgrade.
Wirecard (WDI.DE) bounced off the 200-session moving average and climbed back above the price zone ranging around the €140 handle. Solid resistance and the first potential target for the bulls can be found in the vicinity of recent highs at €153.50. Source: xStation5
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