Coca-Cola Falls, Forest Labs Gets Bought As Dow Falls

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

A little confused to wake up this morning and see a plastic toy "Barbie" on the Sports Illustrated swimsuit edition cover instead of a real human? That's OK. Wall Street had a confusing day too -- the Dow Jones Industrial Average (DJINDICES: ^DJI  )  dipped 24 points Tuesday on a mixed start to the four-day holiday-shortened week.

1. Actavis buys Forest Laboratories for $25 billion
Irish pharmaceuticals made Wall Street buzz like an EDM dance floor Tuesday as Dublin-based Actavis PLC announced that it's buying New York-based Forest Laboratories  (NYSE: FRX  )  for $25 billion in cash and stock. The deal creates a juggernaut of generic and brand-name pills that's giving Wall Street an overdose. 

The Carl Icahn playbook worked like a charm, once again. The famous and freckled investor has accumulated 11% of Forest shares since 2009, and Tuesday is his $2.7 billion payday. He infiltrated, by putting two of his Icahn Enterprises henchman on the board of Forest. Then he attacked, by trimming and prepping the company like a cocker spaniel to be bought by a bigger corporate suitor. This acquisition is the finale of a 209% return for those who first touched Forest in 2009 with Icahn.

Forest shareholders will get $26 in cash and .3306 of an Activus share for being taken over. That's equivalent to $89.48 a share based on Tuesday's Activus share price, so Forest shares jumped 27% to $91. The sugar on top for investors -- Forest profits will be taxed at Ireland's lower corporate tax rates. It goes down like a pint of Guinness.

2. Candy Crush iPhone game announces IPO
Move over, Angry Birds, because the blindingly colorful smartphone game Candy Crush is bringing its talents to Wall Street. The game's developer, King Digital Entertainmentplans an IPO soon to raise $500 million by offering its stock to the public. Let the trading games begin.

It's all about the "freemium" model for the Swedish-based gamer -- King offers its games for free but then charges users for "cool" features mid-game. The company's revenues popped to an unbelievable $1.88 billion over 2013 from just $166 million the year before (although Candy Crush accounted for nearly 80% of that cash).
The takeaway is that investors have already honeymooned with phone-game pioneer Zynga (NASDAQ: ZNGA  )  -- but as gamers lost interest in Zynga's once-cool FarmVille, Wall Street lost interest in the stock, which now trades at half the price of Zynga's 2011 IPO. The pressure will be on King Digital to make (shocker) more than one good game.

3. Coca-Cola earnings are OK but revenues shrink
It was a bunch of 1% moves that caused Coca-Cola's (NYSE: KO  ) earnings to fall flat. The company that's No. 1 on former Mayor Bloomberg's most-hated list fell down 3.8% in trading on Tuesday. Global sales volumes rose 1%, but volumes in North America and Europe fell 1%. Is soda on the out for developed countries?

Wall Street lives on growth, and modern health campaigns by Michelle Obama and others are not making Coke executives in Atlanta happy. Developed markets are falling out of love with sugary soda drinks, making growth tougher than ever. Fourth-quarter earnings climbed 2%, as Wall Street expected, but revenues were down 4%, which made investors spit out their drink. 

Coke stock was flat for all of 2013, making investors wonder: Are there enough Chinese to keep Coke sweet? On the upside though, Coke stock is as consistent as it gets with dividends (about 3% of the total stock value is returned every year in dividends), so a flat stock price won't make the Coke polar bears lose their Christmas spirit.  

  • Minutes from the Federal Reserve's last policy meeting are released
  • Fourth-quarter earnings reports: Tesla Motors, Marriott Hotels
As originally published on

There's a huge difference between a good stock and a stock that can make you rich
The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2844134, ~/Articles/ArticleHandler.aspx, 9/1/2015 12:40:32 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Market Snacks

MarketSnacks creates a single, simple, daily summary of what’s happened on Wall Street -- that you'll actually want to read.

Today's Market

updated Moments ago Sponsored by:
DOW 16,171.93 -356.10 -2.15%
S&P 500 1,926.86 -45.32 -2.30%
NASD 4,690.12 -86.39 -1.81%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/1/2015 12:25 PM
^DJI $16171.93 Down -356.10 -2.15%
FRX $0.00 Down +0.00 +0.00%
Forest Laboratorie… CAPS Rating: ****
KO $38.82 Down -0.50 -1.27%
Coca-Cola CAPS Rating: ****
ZNGA $2.50 Down -0.04 -1.38%