The stock market had an up-and-down session on Monday, as investors struggled to reconcile the latest happenings in Washington politics with the various forces buffeting the U.S. and global economies. Major benchmarks traded on either side of the unchanged mark and finished mixed, with many market participants focused on new product announcements from Silicon Valley and the shape of the rapidly inverting yield curve. Some stocks performed badly, reflecting negative responses to news. Penn Virginia (NASDAQ: PVAC), Evolus (NASDAQ: EOLS), and Cousins Properties (NYSE: CUZ) were among the worst performers. Here's why they did so poorly.
Shares of Penn Virginia dropped 9%, adding to their losses from Friday after the Houston-based energy company agreed to terminate a merger agreement. Denbury Resources (NYSE: DNR) had been slated to purchase Penn Virginia in a $1.7 billion deal that would have given Penn Virginia shareholders $25.86 per share in cash plus 12.4 shares of Denbury stock, but many found the deal controversial in light of uncertainties about whether Denbury's enhanced oil recovery techniques would be successful in boosting production at Penn Virginia assets. Without the merger to prop up its stock price and with crude oil dropping back below $60 per barrel, investors seem nervous about Penn Virginia's future.
Finally, shares of Cousins Properties fell 6%. The Atlanta-based real estate company announced that it would merge with Dallas-based TIER REIT (NYSE: TIER), issuing 2.98 shares of Cousins stock for every share of TIER. As Cousins CEO Colin Connolly explained it, the merger "creates the preeminent Sun Belt office REIT," with properties in key markets including Austin, Dallas, Phoenix, Atlanta, Charlotte, and Tampa. Yet investors felt that TIER got the better end of the deal, as TIER's shares rose 7%. Nevertheless, if the combination produces the synergies that the REITs expect, then it could prove beneficial to all involved.