The Freedom Foods Group Ltd (ASX: FNP) share price has jumped 2.8% higher this morning after the company released an update following media speculation about a potential acquisition.
What did Freedom Foods say in the update?
Freedom Foods management noted recent market commentary and speculation regarding the company's potential involvement in an acquisition of the Lion Dairy and Drink (LDD) portfolio. The LDD portfolio is currently subject to a sale process by Kirin Holdings Company Limited.
Freedom management confirmed it is not pursuing a bid for the LDD portfolio as part of the current sale process, and the company said it remains focused on delivering on its opportunities across Dairy Beverages and Nutritionals, Plant-Based Beverages and Speciality Cereals and Snacks.
Why did FNP put out the response?
Freedom Foods has been linked to the LDD portfolio for quite some time, with reports In early December suggesting the company may be teaming up with Coca-Cola Amatil Ltd (ASX: CCL) for a $1.5 billion bid.
Somewhat ironically, both Coca-Cola and Freedom Foods have had plenty of other things to worry about in the last 6 months.
The Coca-Cola share price plummeted 14.5% in just one day after the company put out its 2018 Investor Day presentation which showed ongoing headwinds across key segments including soft drinks. The company also recently wrote down its SPC cannery investment to zero following minimal interest from a sale process of its own.
Freedom Foods hasn't fared much better, with the company's share price falling 7.5% this year as rumours have swirled about the company's solvency and ongoing operational viability.
Is Freedom Foods a Buy?
Given the company's recent financial results, I'd be steering clear of Freedom Foods for the time being.
The ongoing struggles for the likes of Coca-Cola Amatil and Freedom Foods have been a key reason behind the Consumer Staples sectoral underperformance so far this year, as late-cycle profit margins continue to
For those who are similarly bearish on Freedom Foods, I'd suggest checking out these top growth shares which could provide capital gains in 2019 and beyond.
