eBay is to buy Paypal, for $1.5bn in stock. The capital markets are dead, and PayPal needs eBay - It became the world"s biggest web micropayments platform on the back of an exclusive deal with eBay. and 60 per cent of its turnover derives from this auction marketplace. This ended earlier this year, and eBay hoovered up stock in Billpoint, a rival payments provider.
eBay reckons it can save operational costs by combining the two companies - earnings will be immediately accretive on a pro-forma basis (i.e. with the merger costs stripped out). The company also becomes substantially bigger by gaining control of the online payment system.