McCormick Gears Up for Acquisition With Secondary Offering
Shares of McCormick saw a handy gain on Wednesday after the firm announced that it had priced its secondary offering.
This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.
Shares of McCormick & Co. (NYSE: MKC) saw a handy gain on Wednesday after the firm announced that it had priced its secondary offering. The purpose of this offering is ultimately to fund McCormick’s acquisition of Reckitt Benckiser’s Food Division.
In terms of the offering, McCormick plans to price its 5.52 million shares of its common stock (non-voting) at $90.50 per share, with an overallotment option for an additional 828,729 shares. At this price, the entire offering is valued up to $575.0 million.
Most of the time when a company conducts a secondary offering, shares generally take a step back because the current shareholders are being further diluted. However in this case, the non-voting shares, combined with the fact that the proceeds will be used for an accretive acquisition, have actually spurred shares higher.
[nativounit]
The net proceeds from the offering are expected to be approximately $482 million, after discounts, commissions and expenses. McCormick intends to use the net proceeds of the offering to fund, in part, the purchase price of the previously announced pending acquisition of Reckitt Benckiser’s Food Division.
Keep in mind that the offering is not contingent on the closing of the acquisition or any debt financing. If for any reason the acquisition does not close, McCormick intends to use the net proceeds for general corporate purposes, which may include the financing of future acquisitions and the repayment of existing indebtedness.
The underwriters for the offering are Merrill Lynch, Credit Suisse, SunTrust Robinson Humphrey and Wells Fargo.
Shares of McCormick were last seen up over 3% at $96.14, with a consensus analyst price target of $99.50 and a 52-week range of $88.64 to $106.50.
[recirclink id=405640]
[wallst_email_signup]
Contact [email protected] for any questions or corrections.
Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics. Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications. A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.
