Exchange traded funds (ETFs) opened slightly higher Monday on a new round of corporate deals.
- Pfizer Inc. and Kohlberg Kravis Roberts & Co. LP said Monday that an affiliate of KKR would pay $2.4 billion in cash to buy Pfizer’s Capsugel unit, described as the world leader in hard capsules and an innovator in drug-delivery systems. In 2010, Capsugel recorded $750 million in revenue and manufactured more than 180 billion hard capsules. “We share Capsugel’s enthusiasm for its future potential to grow, develop and continue to deliver an unmatched quality of products,” said Henry Kravis, co-chief executive of private-equity powerhouse (NYSE KKR) in a statement. KKK shares are up approx. 1% in early trading. The Pharmaceutical HOLDRs ETF (AMEX:PPH) is up 0.5% early Monday.
- Shares of Vodafone Group PLC rose on Monday after the U.K. mobile giant said it will sell its 44% stake in SFR to France’s Vivendi for around $11.3 billion. The deal is in line with Vodafone’s (NYSE:VOD) strategy to shed minority assets in various regions and refocus its business on Europe, India and Africa. “Our board remains committed to realizing maximum value from our non-controlled assets,” said Vodafone Chief Executive Vittorio Colao in a statement. “The sale of our stake in SFR, at an attractive multiple, represents a significant further step in the execution of this strategy.” The iShares S&P Global Telecommunications ETF (NYSEArca: IXP) is up slightly today.
- European markets edged higher Monday as deal news lifted some stocks including Vodafone Group PLC and French chemicals manufacturer Rhodia SA. The Stoxx Europe 600 index edged up in late morning trade after jumping 1.5% on Friday, helped by robust U.S. jobs data. The biggest mover on the pan-European index was Rhodia (FR:RHA) which surged nearly 50% in Paris after agreeing to be bought by Belgian chemicals group Solvay SA (BE:SOLD) for 3.4 billion euros ($4.8 billion). Bank stocks were mostly lower across Europe as worries over capital levels and potential regulatory reforms continued to make investors nervous. “There are just lots of question marks over where the banking sector goes from here,” said Peter Dixon, a strategist at Commerzbank. The Vanguard MSCI European ETF (NYSEArca: VGK) rose in early trading.
- Treasury prices rose slightly Monday, pushing yields down, ahead of bond buybacks by the Federal Reserve and a continuation of speeches from Fed officials, which some analysts expect will temper expectations for tighter monetary policy. “This week will see Fed purchases and Fed speakers that will create a more balanced sentiment,” said John Spinello, a bond strategist at Jefferies & Co. The Fed will conduct four buybacks this week, continuing the program that is the centerpiece of the Fed’s loose monetary policy. It’s also the program that was criticized by several Fed officials in the last couple of weeks who pointed to inflation risks and progress in the economy as justification for ending the program, possibly before its intended end date in late June. The iShares Barclays 1-3 Year Treasury Bond(NYSEArca: SHY) is trading flat early Monday.
Gregory A. Clay contributed to this article
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