Finally some releif for stocks. After six straight days of selling, the bulls were able to stop the bleeding … and in rather dramatic fashion. The S&P 500 rallied a whopping 3.9%, finishing the session at 1,940.51.
It wasn’t a banner day for all equities, however. Syngenta AG (NYSE:SYT), Schlumberger Limited (NYSE:SLB) andGrubHub Inc. (NYSE:GRUB) all finished the session rather deep in the red.
Syngenta (SYT)
In yesterday’s “Worst Stocks” look, we pointed out that what was seen as good for Syngenta was correspondingly bad for Monsanto Company (NYSE:MON), as it was aiming to acquire SYT at a marketable but palatable price. Today we’re learning that the relationship is a two-way street — what’s good for MON owners is explicitly bad for the Syngenta shareholders.
Long story short, Monsanto has altogether dropped its bid for Syngenta, which last came to a total offer of $46 billion.
The official statement from Monsanto read: “Without a basis for constructive engagement from Syngenta, Monsanto will continue to focus on its growth opportunities built on its existing core business to deliver the next wave of transformational solutions for agriculture.” The translation of the message in layman’s terms is more along the lines of, “We were tired of being jerked around and never given a reasonable answer or counteroffer.”
Syngenta says it was the one who did the breaking-up.
All told, relieved MON shareholders sent their stock up more than 8%, while surprised SYT shareholders sent their stock down more than 13%.
Schlumberger Limited (SLB)
Although it’s likely to prove a wise move in the long run, the 3% drop from Schlumberger shares today (on a day when the broad market as well as oil prices were firmly higher) says SLB investors aren’t pleased with the price the company is paying to acquire oil and gas well equipment maker Cameron International Corporation (NYSE:CAM).
All told, CAM shares gained more than 40% after Schlumberger Limited offered to buy the company using a combination of cash and SLB stock that valued Cameron at $14.8 billion.
Although the deal unites two complementary but not overlapping companies and promises to save $600 million per year when all the combined synergies are realized, Schlumberger shareholders are struggling with the terms of the deal.
GrubHub (GRUB)
Last but not least, GrubHub took a sizable hit on Wednesday thanks to a major downgrade — Barclays now rates GRUB as an “equal weight,” down from an “overweight” rating.
Barclays analyst Christopher Merwin explains:
“We were originally hopeful that unmatched scale would give GrubHub a competitive advantage in penetrating its $70B TAM, but we believe new start-ups, aided by a favorable VC funding environment, will make growth in non-core markets more difficult. … Lastly, we believe it may be difficult for GrubHub to quickly scale the Restaurant Delivery Service (RDS) business: management seems focused on investing prudently and maintaining margins while private competitors do not have the same constraints. Longer-term, we think one or two players (likely GrubHub) will roll up the category, but for the next 12 months, we believe competitive pressures will persist.”
GRUB shares fell 6% on the downgrade.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
