Puig Shares Expected to Drop Sharply After Failed Estée Lauder Deal
Market Reaction and Implications of the Failed Merger
By Mireia Merino
Immediate Market Impact
May 22 (Reuters) - Puig's shares were expected to fall at least 10% on Friday after the Spanish perfumery and U.S. cosmetics maker Estée Lauder said on Thursday they had ended merger talks.
Share Price Movements
Puig was indicated to fall between 10% and 12% at Friday's open, according to traders. Estée shares rose more than 10% in extended trading on Thursday.
Background and Context
Details of the Failed Talks
The failed talks, which would have created a $40 billion luxury beauty giant, remove a potential deal premium for Puig and come after the company reported slower sales growth for the first quarter in April.
Analyst Commentary
J.P. Morgan's Perspective
J.P. Morgan said in a note that the end of the talks was likely to weigh on Puig shares, with investors' attention returning to operating results as growth in fragrances normalises and pressure persists in the Middle East and travel retail.
Company Response
Puig will remain focused on executing its strategy, it said in Thursday's statement, adding that its capital structure would give it flexibility for selective mergers and acquisitions.
(Reporting by Mireia Merino)
