The McPherson’s Ltd (ASX: MCP) share price is rising today after its board recommended shareholders reject a takeover bid for the company.
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At the time of writing, shares in the health and beauty supplier were trading higher at $1.425, up 0.71%. By comparison, the S&P/ASX All Ordinaries Index (ASX: XAO) is up 0.84%.
Let’s take a closer look at these latest developments and how they might affect the McPherson’s share price.
McPherson’s brushes off Gallin
In today’s ASX statement, McPherson’s confirmed its board was unanimously recommending shareholders reject the offer from Gallin to buy 100% of the shares in the company for $1.34 each.
The board said the offer “profoundly undervalued the company”.
McPherson’s chair Graham Cubbin said Gallin was “exploiting” recent share price weakness to buy the company:
The offer has been opportunistically timed to exploit McPherson’s recent share price weakness following a period of challenging trading conditions.
Shareholders who sell their MCP Shares to Gallin will not benefit from any future growth and any share price improvement above recent lows.
In the release, Mr Cubbin told shareholders McPherson’s still had significant room for growth.
The company was currently working on a “comprehensive” operational review to identify areas of growth and implement strategies.
At just under $1.43, the current McPherson’s share price is trading higher than the Gallin offer of $1.34.
In its pitch to shareholders, Gallin claimed McPherson’s was “in urgent need of reinvigoration…” In addition, Gallin said a $46 million capital raising effort by McPherson’s in October 2020 followed by a profit downgrade within 1 month of it raised “a number of red flags…” about the company.
McPherson’s claimed Gallin was merely trying to “acquire as large an investment exposure as possible to McPherson’s at the least possible price”. The board did not indicate whether it would be prepared to accept a revised offer from Gallin.
McPherson’s share price snapshot
As noted, the McPherson’s share price has faced challenges recently. Over the past 12 months, the company’s shares have fallen 36.5%. The company has been hit especially hard by the COVID-19 pandemic and international border closures.
McPherson’s has a market capitalisation of $183.6 million.
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Motley Fool contributor Marc Sidarous 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.