Although the bulls started the new trading week as bullishly as they finished the prior one, it didn’t take long for traders to remember the market is uncomfortably overextended here. By the time the closing bell rang, the S&P 500 had peeled back to a close of 2,256.96, down 0.11% for the day.
That setback was a mere drop in the bucket compared to the losses Twenty-First Century Fox Inc (NASDAQ:FOXA, NASDAQ:FOX), Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) and Viacom, Inc. (NASDAQ:VIAB) suffered today, however.
Here’s a closer look at what went wrong for each.
Viacom, Inc. (VIAB)
For weeks it looked as if television giants Viacom and CBS Corporation (NYSE:CBS) were on course for a merger, orchestrated by National Amusements’ Sumner and Shari Redstone. Today the Redstones announced there would be no such deal, pulling the rug out from underneath VIAB, sending it 9.4% lower as a result.
The deal would have effectively meant CBS acquired Viacom. The father/daughter duo wrote:
“Following the management changes that the Viacom board put in place, we have been very impressed with the forward-looking thinking and strategic plan being pursued under Bob Bakish’s leadership.”
Although the deal would have been fruitful for both CBS and VIAB shareholders, CBS didn’t suffer the same fate VIAB did on Monday. As it turns out, with Viacom now out of the picture, rumors that Verizon Communications Inc. (NYSE:VZ) is interested in acquiring CBS have surfaced.
Alexion Pharmaceuticals, Inc. (ALXN)
It’s not entirely clear why or what it means, but in light of the circumstances, it can’t be a good sign.
Today, Alexion Pharmaceuticals CEO David Hallal and CFO Vikas Sinha resigned from their posts. Hallal said he was stepping down for personal reasons, while Sinha reported he was leaving to pursue other opportunities. Their exits — effectively even if not technically terminations — are almost certainly the result of an accounting probe that could potentially lead to a restatement of previous results.
ALXN ended the session down 12.8%.
Twenty-First Century Fox Inc (FOXA)
Last but not least, VIAB wasn’t the only entertainment and media name to be upended on Monday. Twenty-First Century Fox was also sent lower today, to the tune of 6.6%. And like VIAB, a merger was at the heart of the setback. Unlike VIAB though, it wasn’t a failed union that sparked a selloff, but rather, the likelihood that one will proceed … with concerning consequences.
In short, Twenty-First Century Fox wants to buy Britain’s satellite TV and internet service provider Sky, offering $14.2 billion for the 61% of the cable company that it doesn’t already own.
Although overseas expansion is compelling on the surface, this particular pairing is a bit problematic for FOXA owners in that it could put a serious strain on Fox’s balance sheet. In fact, Moody’s already warned that the deal would force the credit rating outfit to review Twenty-First Century Fox for a potential downgrade of its current creditworthiness.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
