Why McDermott International, Chicago Bridge & Iron, and Novavax Slumped Today
The stock market paused in its upward trajectory on Tuesday, which was a bit surprising in light of a favorable vote on the tax reform bill in the House of Representatives. Major benchmarks were generally lower, although losses were measured. Some investors pointed to the tendency of the market to climb in anticipation of good news only to sell off when the good news actually happens. Yet some stocks saw more precipitous declines. McDermott International (NYSE: MDR), Chicago Bridge & Iron (NYSE: CBI), and Novavax (NASDAQ: NVAX) were among the worst performers on the day. Below, we'll look more closely at these stocks to tell you why they did so poorly.
Shares of McDermott International and Chicago Bridge & Iron both fell after the two companies announced that they had agreed to a merger. McDermott dropped 12% in the wake of its all-stock offer, which would result in Chicago Bridge shareholders receiving about 247 shares of McDermott stock for every 100 shares of Chicago Bridge they own. It's fairly common for the acquirer in an all-stock deal to see its shares drop as investors take measures to lock in profits, but typically, shares of the target company will go up.
Image source: Chicago Bridge & Iron.
Source: Fool.com