1:45PM NY – 6:30PM Frankfurt – Telecoms in Italy, banks in Germany and retailers in the UK drive major exchanges higher across Europe.

Indexes across the European markets rose on deal news. Italian index gained 0.44% at close on an offer from AT&T and American Movil to buy an indirect controlling stake in Telecom Italia. The bid may come under resistance from Italian government indicated by Communications Minister Paolo Gentiloni. He said that the government deems the telecom company as strategic asset and will encourage local banks to bid for the asset.

TeleocoM Italia (TI) rose 9.2% and Pirelli gained 9.4%.

The news lifted other telecom stocks across the region. Telefonica in Spain jumped 1.3%, Vodafone (VOD) in the UK rose 2.1%, France Telecom in Paris added 2.8% and Deutsche Telekom in Germany advanced 3% at close in respective markets.

Stocks of telecom equipment makers fell on the news of possible global consolidation. Nokia dropped 1.3%, Ericsson lost 1.4% and Siemens edged 0.1% lower.

Italian national carrier Alitalia stocks were halted from trading on the news that Aeroflot and Mediobanca have teamed up be the third bidder for the airline. The airline is expected to report its annual profit statement in the third week in May.

Daimler Chrysler (DCX) rose to a six months high on the hopes that sale of its Chrysler unit will bring more than expected by analysts.

Germany’s online stock broker Comdirect Bank rose 10% on rumors that Commerzbank is likely to buy the company.

Spanish airline Iberia gained 1% on the news in the UK media that British Air is likely to consider bidding for the Spanish airline. The British carrier own 10% of Iberia.

Supermarket retailers in the UK rose on the media report that J Sainsbury plc is likely to receive a bid of 10 billion pounds from a private equity group. Sainsbury rose 0.6%, William Morrison Supermarkets gained 2%, and Marks & Spencer Group advanced 2.4% on the news.

12:00PM NY – 5:00PM Milan – Telecom Italia may not pass government scrutiny.

AT & T and Mexico based American Movil each has agreed to offer 1.35 billion euros for one third stake in holding company Olimpia. The holding company owns 18% of Telecom Italia, which is 80% controlled by Pirelli & C.SpA.

Shares of Telecom Italia (TI) jumped in trading in Milan and in New York. In Milan trading the shares of Telecom Italia jumped 12% to 2.40 euros and Pirelli jumped 16% 95.6 euros. In New York trading Telecom Italia shares rose 9.4% or $2.69 to $31.35.

Italian Communications Minister Paolo Gentiloni said that the telephone company is a strategic asset and urged Italian industrial companies and banks to counter the bid. The government is likely to urge insurance company Generali and other local companies to take the stake.

The former Chairman of Telecom Italia, Marco Tronchetti Provera, resigned after the Prime Miniser Prodi scuttled his plan to split the mobile company from the fixed-line business and restructure the company.


11:30AM NY – KKR is in a deal to acquire First data Corporation for $29 billion.

First Data Corp has agreed to be acquired by buy out firm KKR for $29 billion of $34 per share. The deal includes assumption of nearly $3 billion in debt. The deal values the 2007 earnings at 14 times and nearly 19 times the earnings before interest, taxes and depreciation.

The deal is priced at a premium of 26% to the March 30 closing price. The largest credit card and bank payment processing company was put on the sale by its CEO Henry Duques after spinning off its money transfer division Western Union. First Data stock jumped 20% or $5.60 to $32.48 after rising to $32.90.

Low interest rate environment has kept buyout companies busy with deals and larger deals are becoming norms in these transactions. In the last six months KKR has raised close to $100 billion to complete several buyout that it plans to finish this year. Several industry estimates suggests that more than $2 trillion deals can be completed this year if stock market remains lackluster and interest rate environment does not change. In the first quarter alone more than $175 billion of deals have been completed.

10:15 AM NY - Tribune agrees to a takeover offer of $8.2 billion from Sam Zell.