Perrigo plunged in heavy trading on the Tel Aviv Stock Exchange after its $8.6 billion purchase of the Irish drug maker Elan on Monday, weighing down the benchmark TA-25 index in a generally up market. Lower share prices in the Far East and on Wall Street buttressed the trend.
Perrigo, the world's biggest maker of generic over-the-counter drugs, was 4.4% lower by the end of trading, with NIS 80.1 million changing hands. The deal, which ended a bitter takeover battle in which Elan rejected three lower bids, will hand Perrigo tax savings from being domiciled in Ireland and royalties from a blockbuster multiple sclerosis treatment.
The TA-25 index ended the day down 0.4%, at 1,223.55 points, and the broader TA-100 index closed down 0.3%, at 1,107.60 points. Turnover was a very light NIS 873.4 million, although even that was more than double Sunday ’s trading volume of just NIS 356.6 million.
"Trading in Tel Aviv is expected to break new low records in the coming weeks as many traders take their yearly vacations," said Ran Shachar, the chief investment manager at Alfa Platinum Mutual Funds.
Bank shares were mostly lower, with Bank Hapoalim and Mizrahi Tefahot Bank both down about 0.8%. But technology shares were higher, paced by online translation company Babylon's 6% jump.
Babylon said on Monday that second-quarter net profit soared 74% from a year ago, to about NIS 40 million. Moreover, it reported its revenue sources had broadened, with 43% coming from the Google search engine and 32% from Yahoo.
Global markets were mixed. European equities edged up, as a flurry of mergers and takeovers pushed a key regional index back toward a near two-month high. But a fall in bank stocks, caused by expectations of an imminent capital hike at Barclays, caused markets to close below their intraday highs. The pan-European FTSEurofirst 300 index ended up 0.1%, at 1,206.04 points.
U.S. stocks slipped and the dollar came off a five-week low on Monday, a day ahead of the start of the Federal Reserve's two-day policy meeting, which is keenly awaited for signs about when the U.S. central bank will begin to roll back its bond-buying program.
At just past noon New York time the Standard & Poor's 500 Index was down 0.5%, at 1,683.80 points and the Nasdaq Composite Index was down 0.4% at 3,597.20 points.
In foreign currency trading the dollar strengthened ahead of the bank of Israel's August interest-rate decision, adding 0.48% to a Bank of Israel rate of NIS 3.5940 while the euro advanced nearly 0.4% to NIS 4.7724. The central bank announced after TASE trading that the key rate would remain unchanged at 1.25%.
Bond trading was mixed, but Africa Israel Investments' Series Kaf Zion bond dropped 2%, raising its yield to 11.5%. Africa Israel shares were also sharply lower, shedding 3.5%.
Petro Group rose as much as 16% but finally retreated to a gain for the day of 2.9% after the investment fund DK agreed to pay $18 million in cash for the indebted operator of U.S. gas stations.
Other top gainers in Monday’s trading were fashion retailer Fox (4.8%) and holding company Mivtah Shamir (2.5%). Among the biggest declines, was TowerJazz, which dropped 5.9%, making it the biggest loser among TA-100 index stocks.
Telecommunications shares were mixed, with Partner Communications down 2.6% and Cellcom Israel down 1.5%, while Bezeq ended ahead 1.4%.
With reporting by Reuters.