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Why Staples, Office Depot, and Bluebird Bio Slumped on Monday

By Dan Caplinger – Dec 8, 2015 at 12:01AM

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In a falling stock market, these companies took some of the biggest hits. Find out why.

Staples stock took a big hit Monday. Image: Staples.

The stock market suffered a sharp blow on Monday, as oil prices fell below their worst levels in years and led dozens of companies in the energy sector to losses of 10% or more. Yet energy stocks weren't the only ones that had to deal with substantial declines on the day, as Staples (SPLS), Office Depot (ODP -0.14%), and Bluebird Bio (BLUE 0.45%) were among the worst-performing stocks outside the oil and gas industry on Monday.

The 14% loss for Staples and the 16% decline in shares of Office Depot were both linked to a major roadblock in the planned merger of the two companies. For the better part of a year, investors have hoped that Staples' proposed $6.3 billion cash and stock deal to acquire Office Depot would be able to survive the scrutiny of antitrust regulators. On one hand, the two companies are the sole survivors of the big-box office-supply retail market after Office Depot bought out rival OfficeMax, and it's hard to convince antitrust regulators that uniting top competitors in a single industry is a good idea. Proponents of the deal have argued that broader-line big-box retailers and e-commerce specialists are also major competitors in the market, and so a combination of Staples and Office Depot shouldn't hurt competition when you consider that broader market.

Regardless, the Federal Trade Commission officially filed an administrative complaint challenging the merger of the two companies. Office Depot and Staples responded by saying they would contest the FTC decision, pointing to the regulator's own findings in the OfficeMax deal saying that competition existed beyond Staples to those outside the traditional office-products specialty business as well. In particular, the two companies will show the FTC that new competition in the digital economy has had a disruptive effect on the entire industry, making it vital that they be allowed to combine forces. With Staples having shown a willingness to divest some of Office Depot's assets after a potential merger, it's entirely possible that the two office-supply retailers will eventually get their wish -- even if it's after a longer process than they had hoped.

Finally, Bluebird Bio plunged 38%. The clinical-stage biotech company released several sets of results over the weekend at an industry conference, including data from the Northstar Study and the HGB-205 and HGB-206 studies of its LentiGlobin drug. In the company's eyes, the data were encouraging, with Chief Medical Officer Dr. David Davidson saying that the HGB-205 and HGB-206 studies "further demonstrate the potential for gene therapy to make a meaningful and enduring difference in the lives of patients with beta-thalassemia major or severe [sickle cell disease]." Yet after an initial burst of interest based on exciting early results, Bluebird's progress has slowed down too fast in the eyes of impatient investors, and that in part has led to the big decline. The drop brings Bluebird's stock full circle, as the company's shares more than quadrupled between late 2014 and mid-2015 before giving up about three-quarters of its value since then. In the end, Bluebird Bio will have to show its drugs can stand up to tougher forms of the diseases they're targeting if it wants to build gains it can sustain.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends Bluebird Bio. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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