Apr. 28 - Pfizer/AZ, GE/Alstom, Merck/Bayer: just some of the heavyweight names caught up in a fevered round of rumour and speculation that's gripping European markets. Joanna Partridge looks the highlights of the latest M&A activity, and asks how far it can run.
Pushing European stocks higher. Another flurry of proposed merger and acquisition activity giving markets a boost, offsetting investor worries about Ukraine. Both the U.S's General Electric and Germany's Siemens have expressed an interest in French engineering group Alstom, sending its shares upwards. U.S. drugmaker Pfizer is chasing Britain's AstraZeneca., causing its shares to jump by over 16%. And another U.S. drugmaker, Merck, is considering selling its consumer unit for close to $14 billion - with Bayer and Reckitt Benckiser seen as frontrunners. Chris Beauchamp from IG says many pharma firms are looking around. SOUNDBITE: Chris Beauchamp, Market analyst, IG, saying (English): "I think it's the start of bigger moves for most companies in the sector given the news flow creates the incentive for companies to start moving the same direction." GE's chairman and CEO Jeffrey Immelt arrived at the Elysee Palace to discuss a possible Alstom deal with President Hollande. He'll have a hard time convincing France's government to support the $13 billion purchase of Alstom's power turbines business. The potential loss of a national champion has caused political uproar. Economy Minister Arnaud Montebourg said France would block any deal which it didn't consider suitable for the long-term interests of the company, its employees and the economy. Montebourg and Hollande are also meeting the CEO of Siemens. Alstom's German rival has proposed an asset swap to counter the Alstom-GE tie-up, which may appeal more to Paris, says Pierre Briancon from Reuters BreakingViews. SOUNDBITE: Pierre Briancon, Reuters BreakingViews, saying (English): "Siemens' counter-offer is attractive from an industrial point-of-view, not mentioning the political viewpoint. The French government doesn't have any share in Alstom, it's not a shareholder, even though it considers itself a stakeholder. There's no doubt it will have a big say, but the Alstom board ultimately will decide." That decision may take some time. And there's no end expected to the M&A flurry, in the pharma sector and elsewhere. SOUNDBITE: Chris Beauchamp, Market analyst, IG, saying (English): "I think it will certainly spark off a lot of discussions in other companies about whether they should be looking to engage in that sort of activity. But it's not without its risks really, we've got GSK saying last week that he thought the era of mega mergers in the pharma sector was over, so you'll see more deals I think spinning off units rather than big mergers like this Pfizer-AstraZeneca news." Merger and asset-swap rumours have been increasing as Europe's economic data has improved. Many investors will be pleased it's not expected to end soon.