McCormick & Company, Incorporated (NYSE:MKC) is among the stocks in focus as Jim Cramer highlighted a market yearning for the status quo ante. Cramer discussed the company’s deal with Unilever during the episode, as he commented:
Sometimes, a group is just so hated that it doesn’t matter what any of its members do. You know the stocks are going lower. Today, McCormick, the flavor company as they call it, made a bold move, merging with Unilever’s food business, including Hellmann’s mayonnaise, Colman’s mustard, Knorr soups, in what’s known as a Reverse Morris Trust transaction. Unilever and its shareholders will own nearly two-thirds of the company going forward, but it’ll keep the McCormick name and its New York Stock Exchange listing. McCormick runs the show going forward. I like that management team.
Deal should be additive to McCormick’s earnings in the first year. Huge cost savings, terrific synergies, and the market hated it, with the stock plunging 6%… What’s going on here, really? First, I have to tell you that these kinds of properties don’t come up often enough, and you’d be nuts not to buy them if you’re another major company that needs scale and heft and touch points with consumers as these companies do. McCormick has a terrific food service business. It can immediately add Hellmann’s and Colman’s mustard. Combined with their spices and seasonings and hot sauce, they’ll be able to entirely dominate some aisles in the supermarket. They need to buy it, even if it were just for the Hellmann’s, just for the best…
Do you really think that McCormick won’t run the Unilever food business better than Unilever did? Unilever’s like P&G, it doesn’t want food. It doesn’t fit. They don’t care. Afterthought for them, even though a good company won’t be an afterthought for Brendan Foley from McCormick. Both McCormick and Sysco used to be considered growth companies. Now, they’re value plays in a market where no one wants value. McCormick trades at 16 times earnings, 3.81% yield. Stock just doesn’t entice.
A technical stock market chart. Photo by Energepic from Pexels
McCormick & Company, Incorporated (NYSE:MKC) produces and sells spices, seasonings, condiments, and flavor products for consumers and food manufacturers.
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