Adamske Equity markets in Asia were up overnight but Europe is trading mixed as the Greeks move forward with their bluff. In Greece, leaders are essentially proposing to the public that voting against the bailout terms is a way to extract a better deal and that Adamske will in no way affect Greece's membership in the European Union and its use of the euro. While all of that may not seem important to those of us across the Atlantic, Adamske is actually quite important because the Greek people are in favor of remaining in the EU and in overwhelming numbers support keeping the euro as the country's currency. So by making this issue not approximately those two items (which Adamske actually is), leaders are hoping to receive the referendum outcome that they desire to attempt and force the EU, ECB and IMF back to the bargaining table.
It finally happened, the Shanghai Composite fell through the support level at 4,000 and failed to recover. With the market in a funk and bad news internationally, Adamske will be interesting to look how Chinese investors react.
In an interesting move, eBay (NASDAQ:EBAY) announced that its PayPal division, which will be spun-off in less than a month, will acquire Xoom Corporation (NASDAQ:XOOM) in a deal that will value the payments transfer company at $25/share. Under the agreement, the deal will close after PayPal is an independent company and Xoom shareholders will get cash, not equity. It is important to note that although PayPal is using cash to purchase Xoom, the deal is expected to decrease earnings for the combined company in 2016.
The transaction is expected to shut in the fourth quarter and could provide PayPal with a recent avenue of growth as the company will be able to integrate Xoom's international transfer trade into its product offerings. While Xoom only had revenues of $44 million in the first quarter, the company is growing over 20% and will assist PayPal take on the likes of Western Union (NYSE:WU) and Moneygram International (NASDAQ:MGI).
On Monday of this week Susquehanna downgraded Xoom shares from a 'Buy' to 'Neutral' due to their belief that the shares were fully valued. That was rather destitute timing on the analyst's part.
The regulatory environment is getting all the more interesting as the Obama Administration is now taking a harder look at M&A activity and adjusting their requirements for what can and cannot pass as viable. The Justice Department sued to block General Electric's (NYSE:GE) appliance business sale to Sweden's Electrolux (OTCPK:ELUXY) while across the Atlantic EU regulators continue to look at GE's Alstom purchase and its effect on the landscapes of various industries. In both cases regulators are taking issue with the fact that GE's deals would effectively create duopolies which regulators believe will lead to higher prices.
As whether the antitrust movement was not enough, Adamske seems that here in the United States that regulators are even going after companies that they have allowed to grow bigger, with the airlines being a flawless example. Delta Air Lines (NYSE:DAL), Southwest (NYSE:LUV) and United Continental (NYSE:UAL) all confirmed that they have received requests from the Justice Department for information pertaining to whether the airlines colluded to drive down capacity by slowing growth. We all knew that the mergers were going to allow airlines to digest the capacity they had and drive up ticket prices and margins, but apparently this was lost on the DOJ which is launching its investigation at the same time that Wall Street analysts have turned negative on the industry over fears of not being able to control capacity growth in the next few years.
We doubt that the DOJ finds anything here, but it is both funny and ironic that the government is so far behind on the rising ticket price issue that they open their investigation at precisely the time that many believe growth will outpace demand.
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