Stocks lost ground Monday, heading lower throughout the session as concern about the trade dispute with China continued to weigh on the market. The Dow Jones Industrial Average (DJINDICES:^DJI) and the S&P 500 (SNPINDEX:^GSPC) both closed near their lows for the day.
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Technology was the weakest sector, led down by the big internet stocks; the PowerShares NASDAQ Internet ETF (NASDAQ:PNQI) dropped 2.2%. Gold-related shares held up well, with the VanEck Vectors Junior Gold Miners ETF (NYSEMKT:GDXJ) gaining 2.7%.
As for individual stocks, Aurora Cannabis (NASDAQOTH:ACBFF) soared skyward on a report the company is having discussions with Coca-Cola (NYSE:KO) about new drink possibilities, and Government Properties Income Trust (NASDAQ:GOV) announced it is merging with Select Income REIT (NASDAQ:SIR).
Shares of Aurora Cannabis soared 17.7% after BNN Bloomberg reported that the company is in talks with Coca-Cola to develop cannabis-infused beverages, according to "multiple sources familiar with the matter."
BNN Bloomberg says Coke is not interested in developing drinks that create intoxication, but instead is looking at drinks infused with cannabidiol, or CBD, which is a non-psychoactive component of marijuana. The idea is that the iconic beverage giant is pursuing is a "recovery drink" product, like its Powerade brand but with the ability to ease pain, inflammation, and cramping.
The news follows the recent announcement that Constellation Brands has taken an increased stake in Canopy Growth with an eye toward developing new pot-infused drinks and possibly outright acquiring it in the future. Rumors that Diageo, maker of Guinness beer and Smirnoff vodka, is also on the hunt for a partner in marijuana has caused a buying frenzy in stocks like Canadian pot producer Tilray.
With recreational marijuana about to become legal in Canada next month, stocks like Aurora have plenty of growth prospects in their own right, but the potential tie-ins with global beverage companies with deep pockets have caused fresh interest in marijuana stocks.
Two REITs get together
Real estate investment trust Government Properties Income Trust announced it is buying the portion of Select Income REIT it doesn't already own and renaming itself Office Properties Income Trust (OPI), sending Select Income's shares up 8.4% to $21.75, while causing those of Government Properties Income Trust to fall 24.8%.
The merger will be a stock-for-stock exchange in which Select Income REIT's shareholders will receive 1.04 shares of GOV for each share of SIR. Additionally, Select Income shareholders will receive a special dividend of 0.502 shares of a third REIT (Industrial Logistics Properties Trust) for each SIR share. At today's closing prices, the deal values Select Income shares at $24.25.
Company executives hope that the deal will result in higher valuations for the companies involved due to simplification of their structures. All three REITs are managed by RMR Group, and after the transaction completes, the office properties will be consolidated into OPI and cross-ownership of the warehouse and logistics properties in ILPT will be eliminated. The company expects the change to save $3.1 million in annual expenses and to improve its ability to maintain the quarterly dividend, which is forecast to be between $0.50 and $0.60, based on a target payout ratio of 75% of cash available for distribution.