The McPherson's Ltd (ASX: MCP) share price is on the rise today after the company provided a number of updates on Thursday morning. At the time of writing, the Aussie health, wellness and beauty company's shares are trading at $1.51 per share, up 6.71%.
Let's take a look at what the company announced.
McPherson's this morning provided an FY2021 trading update to the market. Today's quantitative guidance comes after the beauty products supplier was unable to provide guidance due to "unpredictable and sporadic demand" from its exclusive Dr LeWinn's China-based brand partner.
McPherson's today announced a forecast $222 million decline in revenue. The Aussie supplier expects revenue of $200 million to $205 million for FY21 despite a 3% increase in domestic sales.
The big driver has been disappointing China distribution in late 2020. McPherson's said sales via its exclusive China brand partner, Access Brand Management (ABM), in Q4 2020 were "well below expectations".
The McPherson's share price is surging today despite the company forecasting FY2021 underlying earnings per share (EPS) of 5.0 to 6.5 cents per share. That's thanks to the weaker past sales and lower shipments to ABM expected in Q4 2021.
However, it's not just today's earnings downgrade that has been impacting the McPherson's share price.
What else is driving the McPherson's share price?
On 25 March 2021, McPherson's received a Bidder's Statement from Gallin Pty Ltd. That constituted an unconditional, on-market takeover offer to acquire all shares at $1.34 per share.
The McPherson's share price had previously last closed at $1.41, and the board saw the Gallin offer as opportunistic thanks to the "abnormally low, short-term export sales of Dr LeWinn's in FY2021".
As a result, McPherson's directors today unanimously reiterated that shareholders should reject the Gallin offer by taking no action. However, another offer has surfaced and appears to be boosting the McPherson's share price today.
McPherson's yesterday received a non-binding, indicative proposal from Arrotex Australia Group Pty Ltd (Arrotex). Arrotex is proposing to acquire all McPherson's shares at $1.60 per share in an all-cash transaction.
That would be a 31% premium to the 24 March 2021 closing price of $1.22, prior to receiving the Gallin Offer. It's also a 5.96% premium to the company's current share price at the time of writing. The board is now working with Arrotex to put together an offer that would work for McPherson's shareholders.
It's been a big morning for shareholders with the McPherson's share price responding positively to today's updates.