Nestlé Nears Deal to Acquire U.S. Vitamin Producer
Topic of the day
Nestlé SA is in talks to buy the maker of Nature's Bounty vitamins for a price in the mid-single-digit billions, according to people familiar with the matter, as the Swiss food giant pushes further into nutritional offerings. Nestlé could finalize a deal to buy the Bountiful Co. as soon as next week, some of the people said, though it isn't guaranteed they will reach an agreement. Bountiful has been planning an initial public offering and could still opt for that path after all, or a different deal. In the IPO paperwork, Bountiful noted it had net sales of more than $2 billion in fiscal year 2020. With 8.6 billion Swiss francs in cash at year-end (equivalent to $9.4 billion now) and a market value of about 310 billion francs, Nestlé certainly has the wherewithal to do a deal for Bountiful. Bountiful is majority-owned by private-equity firm KKR & Co. Bountiful, previously known as Nature's Bounty, was founded in 1971 as a subsidiary of a pharmaceutical company. It is based in Ronkonkoma, N.Y. The company once had a retail arm in Europe, Holland & Barrett, that it agreed to sell in 2017.
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Despite a significant recovery from the day's lows in the course of trading, the SMI benchmark index of the Swiss stock exchange did not quite make it into positive territory on Friday. The SMI lost 0.2 percent to 11,201 points. Daily winners were the shares of Credit Suisse (+2.2%), which had recently been depressed before and immediately after the quarterly statement on Thursday. Observers spoke of a countermovement due. Analysts at Barclays spoke of a buying opportunity for the brave after the billion-dollar debacle at Credit Suisse by hedge fund Archegos, after the stock had lost about 20% in value since the beginning of the year. Lafargeholcim (+0.4%) earned significantly more in the first quarter thanks to stronger sales in all markets, with the building materials producer's adjusted earnings before interest and taxes more than doubling to 528 million francs. The company also raised its outlook. At Nestle, there was a hail of positive analyst comments after the strong business results of the previous day, but the share price still came back by 0.3 percent. Here, profits were probably taken after the previous day's plus.
European stock indexes ended slightly lower Friday, as investors remained cautious about the Old Continent's economic outlook, despite a series of encouraging economic indicators and corporate results. The Stoxx Europe 600 index gave up 0.2% to 438.9 points, bringing its decline for the week to 0.8%. In Paris, the CAC 40 and the SBF 120 each gave up 0.2% on Friday. In Frankfurt, the DAX 30 fell 0.3%, and the FTSE 100 in London ended unchanged. Ipsos (+5.9%) saw its first-quarter revenue grow 14.1% year-on-year in organic terms and said it was "positioned to do better" in 2021 "in terms of revenue than in 2020 and also than in 2019." Seb (+4.6%) reported a 30.9% year-on-year increase in revenue on a comparable basis in the first quarter. Vivendi (+2.8%) reported higher first-quarter revenues, driven by strength at its subsidiaries Universal Music Group (UMG) and Editis. EDF lost 2.9%. On the Milan Stock Exchange, Tod's shares jumped by 11.7%, after announcing that the world's number one luxury goods company LVMH (-0.6%) was going to increase its stake in the company from 3.2% to 10%. The transaction will be completed on April 28.
Investors piled back into stocks Friday, lifting all three major U.S. indexes, as fresh data underscored that a strong economic recovery is under way. The Dow Jones industrial average exited the week up 0.7 percent at 34,043 points. It lagged the other indices, which gained up to 1.4 percent. The reason was the sharp drop in Intel shares, but losses in Honeywell and American Express also slowed. On 2,652 (Thursday:1,361) price gainers on the Nyse came 672 (1,927) - losers. Unchanged 104 (115) stocks went out of trading. In the individual stocks, Intel shares were in focus. The business figures for the first quarter were better than expected and the chip giant also increased the outlook somewhat. However, the fact that the highly competitive server business has collapsed, in which AMD and Nvidia in particular are considered competitors, had a negative impact. The Intel share price sank by 5.3 percent, AMD, on the other hand, gained 4.7 and Nvidia 2.8 percent. Honeywell (-2.1%) did not perform as badly as feared and also raised its sales forecast. The figures of American Express (-1.9%) are also received with disappointment. The credit card company had recorded a surprisingly significant decline in sales in the first quarter. However, the profit rose significantly only thanks to the release of provisions. The social media company Snap (+7.4%) impressed with a surprisingly strong increase in the number of users. Skyworks Solutions (+4.1%) and Silicon Laboratories (+6.9%) were buoyed by the news that Skyworks intends to buy Silicon Laboratories' infrastructure and automotive business - the transaction is worth $2.75 billion.
Economic outlook at the start of the week is creating a good mood on the East Asian stock markets. It is also favorable for share prices that yields on the bond market have recently fallen again, not only in the U.S., but also in China, for example. In Japan, the Nikkei index rose by 0.7 percent to 29,231 points, while in Seoul the increase was the largest at 0.8 percent. In Hong Kong, Shanghai and Sydney, the trend is maintained. This week in Hong Kong, investors are likely to focus on results of major companies such as HSBC and HKEX, KGI Securities said.
Higher capital gains taxes in the U.S.A. could weaken the greenback and prompt the U.S. Federal Reserve to stick to its ultra-loose monetary policy for longer in order to support the economy. This should then also alleviate concerns about a sell-off in the U.S. bond market, thus keeping yields low, which is unfavorable for the dollar. Yields remained at the recently depressed level, in the ten-year range around 1.56 percent.
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