Acquisition rumors drove stock higher
Colgate-Palmolive (CL) stock rose more than 7% on May 17, 2017, before closing at $75.69—up ~5.7% due to rumors that the beleaguered consumer product company is for sale. Citing sources familiar with the matter, the New York Post reported that the company’s CEO, Ian Cook, might be looking to sell the company for $100 per share—a valuation of more than $88 billion.
Earlier, there was buzz that United Kingdom-based Unilever (UL) was in talks with Colgate-Palmolive for a possible takeover. However, when asked by a shareholder, Cook downplayed the speculation at the company’s annual stockholders meeting last Friday. As consumer product companies grapple with moderating category growth and slowing demand, especially in the US (SPY), sector consolidation could be in the cards. The possibility of other bidders, including Kraft Heinz (KHC) and Procter & Gamble (PG), chipping in shouldn’t be a surprise. Notably, Colgate-Palmolive hasn’t provided an official comment.
YTD stock performance
As you can see in the above chart, the stock prices of most consumer product companies (excluding Clorox and Church & Dwight) have been trending down following recent quarterly numbers. As of May 17, Colgate-Palmolive stock generated a return of 15.7% on a YTD (year-to-date) basis. The company exceeded the S&P 500 (SPX) and its peers in terms of price gains due to yesterday’s pop in its stock price. Kimberly-Clark (KMB), Clorox (CLX), Procter & Gamble, and Church & Dwight (CHD) have generated returns of 12.1%, 9.3%, 2.6%, and 12.5%, respectively.