Research Desk Line-up: Flowers Foods Post Earnings Coverage
LONDON, UK / ACCESSWIRE / August 21, 2017 / Pro-Trader Daily takes a look at the latest corporate events and news making the headlines for McCormick & Co. Inc. (NYSE: MKC) ("McCormick"), following which we have published a free report that can be viewed by signing up at http://protraderdaily.com/optin/'symbol=MKC. The Company announced on August 17, 2017, that it has completed the acquisition of Reckitt Benckiser's Food Division ("RB Foods") from Reckitt Benckiser Group PLC. ("RB"), announced previously on July 18, 2017. McCormick will integrate RB Foods into its Consumer and Industrial segments and will retain the brand names of French's, Frank's RedHot and Cattlemen's. The purchase price of the transaction is about $4.2 billion and is subject to certain customary purchase price adjustments through a combination of new debt, comprised of senior unsecured notes and pre-payable term loans, and equity. For immediate access to our complimentary reports, including today's coverage, register for free now at:
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Discover more of our free reports coverage from other companies within the Processed & Packaged Goods industry. Pro-TD has currently selected Flowers Foods, Inc. (NYSE: FLO) for due-diligence and potential coverage as the Company reported on August 09, 2017, its financial results for Q2 2017 which ended on July 15, 2017. Tune in to our site to register for a free membership, and be among the early birds that get our report on Flowers Foods when we publish it.
At Pro-TD, we make it our mission to bring you news that matter about the stock you follow. Today, our research desk covers a blog story on MKC; also brushing on FLO. Go directly to your stock of interest and access today's free coverage at:
http://protraderdaily.com/optin/'symbol=MKC
http://protraderdaily.com/optin/'symbol=FLO
The Announcement
According to the agreement, this acquisition is set to strengthen McCormick's leadership in the attractive condiments category, where products like Frank's RedHot Hot Sauce, French's Mustard, and other iconic, market-leading products are set to reinforce McCormick's Condiments business and will enable it to advance from the current position of #10 to a leading position in the US Condiments category. The acquisition provides the Company a leadership position in the advantaged Hot Sauce Category with Frank's RedHot being the leading brand in the US and Canada. The pro-forma annual 2017 net sales are expected to be about $5 billion, with significant margin accretion. McCormick will further integrate the brand names of French's, Frank's RedHot, and Cattlemen's.
Benefits from the Transaction
McCormick expects this transaction to enhance scale and increase growth through the expansion of its portfolio and consumer base. McCormick anticipates that the Hot Sauce Category is expected to view continued growth, and with insight-driven innovation and a passionate and increasing fan base, there are significant opportunities for expansion. The Company also expects McCormick's growing global millennial household penetration to create substantial upside for Frank's RedHot and the other acquired brands, increasing their respective consumer bases. McCormick also expects revenue synergies resulting from seasonal holidays and grilling events.
Scale and Synergies
The Company expects to leverage its international infrastructure, which already includes condiment consumer insight, sales, and supply chain expertise to significantly expand global presence of its Frank's RedHot and French's, which are expected to result in substantial growth and increased household penetration. With an increased scale, the Company also expects to achieve cost synergies of about $50 million, the majority of which is expected to be achieved by 2020, with anticipated synergies split between selling, general, and administrative expenses and cost of goods sold.
The transaction was initially expected to be completed in Q3 FY17 or Q4 FY17, where the transaction was subject to customary closing conditions, including applicable regulatory approvals. McCormick also obtained committed bridge financing and expects to permanently finance the transaction through a combination of debt and equity. Post the closure of the transaction, McCormick's leverage ratio will increase but the Company has committed to maintaining an investment grade credit rating and returning to its current credit profile over the longer term, according to the announcement made on July 18, 2017. As a part of the commitment, McCormick maintained its dividend policy, curtailed its share repurchase program, and deleveraged the balance sheet with anticipated strong cash flow generation.
Last Close Stock Review
On Friday, August 18, 2017, the stock closed the trading session at $96.09, slightly down 0.56% from its previous closing price of $96.63. A total volume of 688.50 thousand shares have exchanged hands. McCormick's stock price advanced 3.90% in the last one month. Furthermore, since the start of the year, shares of the Company have gained 2.96%. The stock is trading at a PE ratio of 25.54 and has a dividend yield of 1.96%. The stock currently has a market cap of $12.62 billion.
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