Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Applied Materials (NASDAQ:AMAT) sank as much as 9.9% late Monday, then settled to close down around 8.4% after the company and Tokyo Electron Limited jointly announced the decision to terminate their impending merger.
So what: Specifically, Applied Materials says the decision was made after the U.S. Department of Justice advised that the companies' coordinated remedy proposal submitted to regulators wouldn't be enough to replace competition lost from the merger. As a result -- and keeping in mind the deal was first proposed in September 2013 -- Applied Materials and Tokyo Electron together "determined that there is no realistic prospect for the completion of the merger."
Now what: Applied Materials CEO Gary Dickerson admitted the merger would have helped accelerate his company's business strategy. At the same time, he insisted "While we are disappointed that we are not able to pursue this path, our existing growth strategy is compelling."
Applied Materials also attempted to take at least some of the sting away using a separate press release to announce the approval of a new share repurchase program authorizing up to $3 billion in buybacks over the next three years.
To be fair, these kinds of mergers are seldom guaranteed for this very reason. But the market hates being told to hurry up and wait after having its hopes lifted long ago for the promise of that accelerated plan. For now, and given the risk of spurned investors driving shares down in the near term, I personally prefer to watch Applied Materials from the sidelines as it picks itself up from this setback.