why KBL has dropped 3 points in the last 10 days. The Market always seems to know about these sort of things before the regular people find out.
I'm sure they know what they're doing but it seems they paid a pretty high price - $250MM for $200MM in sales. That equates to a "price to sales" ratio of 1.25. Keebler's own p/s ratio is .86 and FLO's is only .38. I checked a few others and many quality food stocks are trading at a price to sales ratio of .5.
This move would also seem to put the kabosh on KBL buying FLO or anyone else buying KBL. Certainly makes it much more expensive to do so, plus, who would want to buy a company while they are trying to merge a new company?
I certainly could be wrong but I would guess this would knock a few more points off of KBL in the next few days. FLO would follow it down, though not point for point. Anyway, just my guess and we'll find out in about 12 hours.
I'm not suggesting this is a bad strategic move by Keebler; not enough info to make such a call at this point. It's just that normally the acquirer suffers for a while in these deals.
Is this what happens when I have one of those rare days when it's virtually impossibe to check on all of you??
Don't rule out the food consolidation wild card; we don't know what potential suitors are thinking and, with most food stocks selling at or near multi-year lows, I wouldn't put the "kabosh" on anything just yet.
Also, I own a large amount of FLO with no intention of selling at this level; with my luck, I'd sell and then find out my exit point was at or near the bottom. It's still only January with a long year ahead!
If a recession begins later in the year because of higher interest rates, FLO is going to look palatable for many more investors.