McCormick & Company shares have fallen 50% from record highs as investors weigh the proposed $15.7 billion combination with Unilever's food business. The deal, which includes a $15.7 billion cash payment to Unilever, would triple McCormick's business but push its leverage ratio to 4.0 times EBITDA, above the company's target. McCormick plans to reduce debt below 3 times EBITDA within two years, and its second-quarter results showed 16.7% revenue growth with adjusted earnings per share of 80 cents, beating estimates. The stock now trades at roughly 8 times current-year earnings, a deep discount to its historical mid-20s multiple, while offering a 4% dividend yield backed by nearly 40 years of consecutive annual increases.
McCormick & Company IncorporatedThe $15.7 billion deal pushes leverage to 4.0x EBITDA, above target, causing shares to fall 50%.
Unilever PLCUnilever receives $15.7 billion cash payment from the deal, a positive financial event.
Unilever PLC