Tuesday, September 03 12:23:54
A 40 percent surge in Nokia boosted technology shares on Tuesday, helping European equities to a one-week high, after Microsoft said it would buy the Finnish company's phone business. The STOXX Europe 600 Technology index rose 2.9percent after the 5.44 billion euro ($7.2 billion) deal.
"We are in an environment of growing merger fantasy for sure as economic conditions are improving, companies are cash-rich and interest rates are very low," Christian Stocker, equity strategist at UniCredit in Munich, said. "I see more mega deals taking place in the fourth quarter."
The deal marks the exit of the 150-year-old company from the global mobile phone market it once dominated. Its current market capitalisation of roughly $15 billion is a fraction of the peak of around $250 billion it reached in 1999-2000 during the height of the tech sector boom.
Mirabaud Securities analyst Susan Anthony said Nokia should be able to resist a full takeover attempt, as Finland would not be keen to see one of its national champions disappear. "Nokia should be able to stand on its own two feet, now that it's more focused, profitable and cash-generative."