BRUSSELS (AFX) - Shares were flat late morning as Dexia fell after it announced it had acquired Turkey's Denizbank and would fund it partially through a capital increase, traders said.
At 11.02 am, the Bel 20 was down 1.02 points or 0.03 pct at 3640.10.
Shares in financial group Dexia were down 0.22 eur or 1.13 pct at 19.29 following its purchase of 75 pct of Turkey's Denizbank AS, which the market considers strategically sound, though amid some concerns that the Franco-Belgian bank may have overpaid.
Kurt Debaenst at Fortis said 'The (1 bln eur) capital increase is weighing on the share price more than the transaction itself.'
'National Bank of Greece paid 3.6x the book value for Finansbank and this is comparable - for the long term it looks like a good acquisition,' he added.
Meanwhile Thomas Nagtegaal at Rabobank said he considers Dexia's outlay on the expensive side.
'The price to be paid is high ... (and) in Turkey book value can be somewhat unreliable in general ... and earnings can be of somewhat lower quality due to trading income elements,' he said in a note to clients.
The bank will hold a conference call at 3.30 pm CET this afternoon to discuss the acquisition.
Telecoms group Mobistar lost 0.95 eur or 1.54 pct to 60.65 whilst peer Belgacom was flat at 24.90 eur.
KBC fell 0.70 eur or 0.84 pct to 82.85. Ivan Lathouders at Bank Degroof said in a note to clients 'The underlying 1Q06 bank net interest income was below our expectations' but said the first quarter was strong overall for the financial group.
In the black, pharmaceuticals had a strong morning. UCB rose 0.55 eur or 1.37 pct to 40.74 and Omega Pharma was up 0.60 eur or 1.15 pct at 52.70.
Solvay put on 0.15 eur or 0.17 pct to 88.65 and saw its target price rased to 98 eur from 97 at Credit Suisse.
Imaging technology group Barco reversed its losses yesterday to increase 0.75 eur or 1.10 pct to 68.85.
Metals group Umicore rose 0.70 eur or 0.64 pct to 110.70. ING analyst Arnaud Goossens said in a note to clients 'We retain our positive stance on Umicore and see the current weakness is an outstanding opportunity to buy the stock.'
'Umicore, with its 100% free float remains a prey (certainly if the zinc business is carved out) as well as a predator thanks to its strong balance sheet,' he added.
Fortis was up 0.28 eur or 1.01 pct. The bank holds its annual meeting today in Brussels and Utrecht. frances.robinson@afxnews.com fr/joy COPYRIGHT Copyright AFX News Limited 2005. All rights reserved. The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News. AFX News and AFX Financial News Logo are registered trademarks of AFX News Limited
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