McCormick Gears Up for Acquisition With Secondary Offering

Companies and Brands

Published: August 9, 2017 11:55 am

Last Updated: January 12, 2020 9:17 am

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.

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.

ALSO READ: 4 Ultra-Safe Stock Picks as Market Becomes Dangerously Overbought

Want to Retire Early? Start Here ^(Sponsor)

Want retirement to come a few years earlier than you’d planned? Or are you ready to retire now, but want an extra set of eyes on your finances?

Now you can speak with up to 3 financial experts in your area for FREE. By simply clicking here you can begin to match with financial professionals who can help you build your plan to retire early. And the best part? The first conversation with them is free.

Click here to match with up to 3 financial pros who would be excited to help you make financial decisions.

Have questions about retirement or personal finance? Email us at [email protected]!

By emailing your questions to 24/7 Wall St., you agree to have them published anonymously on a673b.bigscoots-temp.com.

By submitting your story, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.