It seems Europe collapsing outweighs any enthusiasm from mergers and acquisitions. Mind you, nothing has changed dramatically over the weekend, except a reminder that the great euro experiment continues its march toward potential oblivion. Different Spanish regions are requesting bailouts, first Valencia on Friday and now Murcia today. With dominos falling in Spain, Italy has implemented a one-week ban of short-selling on its financial institutions as investors fear there may not be enough money to bail out both countries. While a short-selling ban might relieve pressure in the short-term, it's akin to shooing flies away from a rotting carcass.
Let's take a closer look at how the three major indexes are faring and check out several stocks making headlines.
|Dow Jones Industrial Average (INDEX: ^DJI )
Source: Yahoo! Finance as of 2:25 p.m.
All three indexes have declined roughly 1%, but all are up off their session lows. The Dow is faring marginally better, despite only five components in positive territory. Disappointing earnings for McDonald's (NYSE: MCD ) are the biggest storyline within the index. Even though McDonald's is well positioned for a poor economy, CFO Peter Benson acknowledged the fears of many investors when he said, "The magnitude of the issues in Europe are having ripple effects around the world." For a company like McDonald's, which does 40% of its business in the troubled region, the impact is more acute.
Now on to more exciting news: Mergers and acquisitions! CNOOC is looking to add Nexen (NYSE: NXY ) to its portfolio for $15.1 billion, a greater-than-60% premium. Shares are only up 50% as investors express some skepticism that the Canadian government will approve the deal. Nexen is largely a conventional operator, getting the bulk of its revenue from the North Sea, but it also has significant oil sands assets as well. The Chinese have been on a natural resource acquisition binge, and although the size of this deal is significant, it follows the current storyline.
GeoEye (Nasdaq: GEOY ) is up 33% after agreeing to a $900 million dollar takeover by key competitor DigitalGlobe (NYSE: DGI ) . Turnabout appears to be fair play. GeoEye was attempting to gain control of DigitalGlobe before losing a key government contract that its rival ended up securing. With that revenue stream in hand, DigitalGlobe has returned the favor.
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