Market Overview

Higher Bid For Blue Buffalo Pet Products 'Unlikely,' Says Imperial Capital

Share:
Higher Bid For Blue Buffalo Pet Products 'Unlikely,' Says Imperial Capital
Related BUFF
Benzinga's Top Upgrades, Downgrades For February 27, 2018
Earnings Scheduled For February 27, 2018
Related GIS
Transportation Costs Push PepsiCo Profits In Q3
60 Biggest Movers From Yesterday
General Mills Offers An Attractive Dividend (Seeking Alpha)

Blue Buffalo Pet Products Inc (NASDAQ: BUFF) investors hoping for a superior offer above General Mills, Inc. (NYSE: GIS)' $40-per-share buyout price may want to reconsider their thesis, according to Imperial Capital.

The Analyst

Imperial Capital's George Kelly downgraded Blue Buffalo Pet Products' stock rating from Outperform to In-Line with a price target increase from $30 to $40.

The Thesis

Blue Buffalo reported above-consensus fourth-quarter results in conjunction with the acquisition announcement, Kelly said in the downgrade note. But the agreement to sell to General Mills has been approved by a group of shareholders who own more than 50 percent of Blue Buffalo's stock, and the transaction is expected to close by the end of 2018.

General Mills' $40-per-share or $8-billion acquisition offer represents a premium valuation multiple at 25x last-twelve-months  or 22x including synergy expectations, the analyst said. Other public pet transactions ranged from 13x EBITDA TO 18X EBITDA.

The pet food company is "unlikely" to be offered a higher bid, so the analyst's revised price target is consistent with Friday's closing price — and the price tag on the deal of $40 per share.

Price Action

Shares of Blue Buffalo Pet Products were trading flat down 0.10 percent midday Tuesday and General Mills' stock was down 2.38 percent after losing more than 3.5 percent Friday.

Related Links:

Why General Mills Spent $8B On A Pet Food Company

46 Biggest Movers From Yesterday

Latest Ratings for BUFF

DateFirmActionFromTo
Feb 2018Wells FargoMaintainsMarket PerformMarket Perform
Feb 2018Wells FargoDowngradesOutperformMarket Perform
Feb 2018Imperial CapitalDowngradesOutperformIn-Line

View More Analyst Ratings for BUFF
View the Latest Analyst Ratings

Posted-In: food George Kelly imperial capitalAnalyst Color Downgrades Price Target M&A Analyst Ratings Best of Benzinga

 

Related Articles (GIS + BUFF)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
DLTRBernsteinUpgrades0.0
CNPUBSUpgrades34.0
UGIUBSDowngrades63.0
ATOUBSDowngrades106.0
CSCONomuraDowngrades50.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

Analyst: Buy Finish Line Ahead Of Sports Retail Earnings Season

FreightCar America Q4 Earnings Preview