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IBERIAN DAILY 14 MARCH (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ACS, MAPFRE, MEDIASET ESPAÑA.

A week marked by volatility and the ECB
After hitting technically relevant intra-day lows on Monday, the European stock markets managed to rally, closing the week with gains amid rising volatility and following the ECB’s message accelerating the withdrawal of stimuli despite the war conflict in Ukraine. Thus, the Ibex 35 ended up rallying by more than +5%, returning to levels of ~8,200 points, whereas the Dax and the Euro STOXX lagged slightly behind, ending with gains of around +4%. Within the Euro STOXX, the best-performing sectors were Insurance and Travel & Leisure, whereas Food and Autos were the worst relative performers. In Spain, February’s inflation was raised unexpectedly. In the United Kingdom, January’s estimated GDP increased above expectations. In the US, the University of Michigan’s consumer confidence index fell more than expected. In China, the M2 supply, lending and total financing slowed more than expected in February. Separately, the Govt. has put under strict quarantine for at least one week the city of Shenzhen for the second-largest Covid-19 outbreak since 2020 with the risk it could spread to other cities. On the geopolitical side, the talks between the US/Venezuela and Iran to remove the block on crude oil from these countries have fallen through, and the US Govt. has warned Russia has asked China for military support, whereas the Ukraine Govt. is optimistic and states that Russia is beginning to speak constructively.
What we expect for today
In a week in which the Fed is expected to raise interest rates, European stock markets would open flat with a slightly bullish slant, with all eyes on the talks between Russia and Ukraine that will continue today, where the oil sector would be penalised by the rout on Brent crude prices. Currently, S&P futures are up +0.7% (yesterday the S&P 500 ended -1.07% lower vs. the European closing bell). Volatility in the US rose (VIX 30.75). Asian markets are mixed (China’s CSI 300 -2.15%, and Japan’s Nikkei +0.55%).
Today we will learn in Spain January’s retail sales. Also, the Euro group will hold its meeting. In debt auctions: Germany (€ 3 Bn in 6M T-bills).

COMPANY NEWS

MEDIASET ESPAÑA, BUY
According to the press, Mediaset Utalia (MFE) could launch a delisting tender offer on Mediaset España (TL5; 50.2% MFE) over the next few weeks in order to subsequently merge the two companies. According to the same sources, no decision would have been made yet, and MFE would be considering as an alternative the possibility of increasing its stake in Prosieben. Note that in June’19 MFE launched a TOB on TL5 (which was unsuccessful), and since then the return for both stocks has been negative (-21% TL5 vs. -15% MFE).
If the transaction materialised, it would be unsurprising, as the company has stated on several occasions that consolidation moves continue to be a base-case scenario for TL5. The recent appointment as chairman of Borja Prado, an investment banker with broad experience in mergers and acquisitions, has been interpreted as a move aimed at resuming the merger transaction with Mediaset Italia.
The key for shareholders in TL5 will obviously lie in the compensation that may be offered. As a reference, in the previous takeover bid, an offer was submitted equivalent to € 6.28/sh. (+24% vs. closing price), although in shares, and as we have previously mentioned, the return on both companies have been negative since then, meaning that this reference no longer seems valid. The average price of TL5 on the stock exchange in the last 6 months is € 4.40/sh.