Why Tyson Foods, Melco Crown Entertainment, and Keurig Green Mountain Tumbled Today

On Monday, the stock market kept rising as investors stayed excited about the prospects for a bull market led by merger and acquisition activity. Yet even as several candidates for takeovers soared today, some of the stocks involved on the other side of transactions -- or that got left behind in the shuffle -- suffered as a result. Among the weakest performers of the day were Tyson Foods (NYSE: TSN  ) , Melco Crown Entertainment (NASDAQ: MPEL  ) , and Keurig Green Mountain (NASDAQ: GMCR  ) , all three of which had to deal with negative news hitting their specific businesses today.

Source: Tyson Foods.

Tyson Foods fell 6.5% as the meat producer managed to win a hard-fought bidding war to acquire Hillshire Brands. After several rounds of bidding, Tyson managed to have its $63 per share final bid accepted, representing a 70% higher price than Hillshire fetched before the bid to acquire the company began. There's no doubt that the deal will provide easy growth for Tyson, which could double its prepared-food sales and help increase margins substantially. Yet by paying so much in its acquisition, Tyson risks diluting the positive effects of the merger and will have to work a lot harder to make sure it doesn't squander the opportunity Hillshire gives it.

Source: Melco Crown.

Melco Crown posted an almost 6% loss as investors worried that conditions in the Asian gaming mecca of Macau might be moderating. After years of huge growth that have raised Melco into the ranks of the best-known gaming companies in the world, Macau has seen a bad start in the beginning of the month, and multiple analysts now believe that growth in the region could suffer at least in the short run. To an even greater extent than its peers in the industry, Melco Crown relies on Macau for its strength. Without a recovery, Melco's losses today could prove to be just the beginning of a longer-term trend.

Keurig Green Mountain also dropped 6.5%, giving back almost all of the gains the coffee giant enjoyed late Friday afternoon. Throughout the industry, investors are worrying about the impact that higher coffee prices could have on sellers like Keurig Green Mountain. Yet margins on K-Cups remain high enough that marginal changes in coffee costs have less of an impact than larger-volume coffee sellers see, and passing through rising costs could be easier for Keurig Green Mountain than for its industry peers. The company's partnership with Dow giant Coca-Cola has much more opportunity to change the way the home-brew machine-maker's stock performs in the long run, but for now, investors are left pondering just what sent the stock on a roller-coaster ride last Friday and today.

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Dan Caplinger

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

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