McPherson's (ASX:MCP) share price jumps 7% on takeover news

The McPhersons Ltd (ASX: MCP) share price is on the move today after the health and beauty company provided two market updates.

| More on:
rising asx share price represented by happy woman dancing excitedly

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

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.

Trading update

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.

Foolish takeaway

It's been a big morning for shareholders with the McPherson's share price responding positively to today's updates.

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Mergers & Acquisitions

two colleagues high five each other as they sit side by side at a long desk in front of their laptop computers in an office environment.
Mergers & Acquisitions

Guess which ASX small cap stock is rocketing 27% on 'transformative' merger

Investors are liking the look of this merger plan.

Read more »

a woman drawing image on wall of big fish about to eat a small fish
Mergers & Acquisitions

Genex share price jumps 38% on $381 million takeover bid

This renewable energy company could be leaving the ASX boards soon.

Read more »

a woman drawing image on wall of big fish about to eat a small fish
Mergers & Acquisitions

2 ASX shares rocketing up to 20% on takeover news

Takeover offers have been put on the table for these companies.

Read more »

Miner looking at a tablet.
Mergers & Acquisitions

Alumina shares leap 8% on Alcoa takeover bid

ASX 200 investors are sending the Alumina share price soaring following confirmation of Alcoa’s takeover intentions.

Read more »

A man stands in a building site featuring brick walls with building equipment in the background.
Mergers & Acquisitions

CSR share price jumps again as blockbuster bid confirmed

Investors are excited about a potential takeover.

Read more »

A fit man sits and prepares to dive into a hole made in frozen ice.
Mergers & Acquisitions

Guess which ASX 200 stock is frozen on a $976 million acquisition

This company is about to throw down more than one-tenth of its value to double its production.

Read more »

A surprised man sits at his desk in his study staring at his computer screen with his hands up.
Bank Shares

ANZ shares tumble despite Suncorp Bank takeover approval

The Australian Competition Tribunal has finally given the deal the thumbs up.

Read more »

Man with rocket wings which have flames coming out of them.
Mergers & Acquisitions

APM shares rocket 73% after rejecting $1.5b takeover

$1.5 billion wasn't enough for this company's board.

Read more »