November 16, 2012
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Schiff Nutrition International (NYSE: SHF ) soared 30% today, after British consumer goods company Reckitt Benckiser Group PLC offered to buy the U.S. vitamin and supplement maker for $1.4 billion.
So what: Reckitt's offer values Schiff at $42 per share, and represents a 23.5% premium over the price that German drug giant Bayer agreed to pay a few weeks ago. Reckitt is jumping into the bidding fray to get into the rapidly growing $30 billion global supplement market and, if successful, expects the deal to add immediately to its adjusted earnings.
Now what: "We firmly believe that our entrepreneurial and consumer-focused mind-set, our infrastructure, speed and scale, combined with Schiff's leading brand portfolio, will generate sustained value for our shareholders," Reckitt CEO Rakesh Kapoor said. Of course, the ball is now in Bayer's court, as it can either sweeten its offer, or simply let Reckitt win and collect a $22 million breakup fee under the terms of its agreement with Schiff. Wall Street is betting on a higher bid but, given how far the shares have run over the past month, Fools should probably stay away from Schiff at this point.
Interested in more info on Schiff? Add it to your watchlist.
More Expert Advice from The Motley Fool
The Motley Fool's chief investment officer has selected his No. 1 stock for the next year. Find out which stock in our brand-new free report: "The Motley Fool's Top Stock for 2013
." I invite you to take a copy, free for a limited time. Just click here
to access the report and find out the name of this under-the-radar company.