The recent M&A speculation surrounding Fever-Tree, has been of interest, and not only for the various spellings and hypens of the company name itself. This has had everything. A company with almost total public recognition, a stellar share price run to ridiculously overpriced levels, and with puns etc, makes for great and easy journalistic copy. As far as the takeover playbook there has also been most of the aspects a classic story might offer.
For instance, Pepsi and Unilever have been mooted. However, Fevertree is far too dynamic and “early stage” for both companies, who tend to buy only when the brand in question is totally bombed out. In the case of Unilever, a company that cannot even decide where its HQ should be, is probably somewhat distracted currently. It would probably be 2028 before it has heard of Fevertree.
Then there was the comment in Digitallook last month suggesting that there could not be a bid for Fevertree, as FT Alphaville had poured cold water on the idea. To be fair, Alphaville specialize in copying and pasting other people’s analysis, and pouring cold water on other people in general, so probably would not know.
That leaves us with just a couple of near term positives. The first is that there has been a share price shakeout (something which could be the source of the bid speculation), and the p/e ratio now down to 70 takes us back from ridiculous to just about bearable. However, Mail on Sunday mention today notwithstanding, it would have to be someone very rich, or very keen to step up to the plate at Fevertree at the moment.
From a technical perspective, the barometer over the next few days will be the 200 day moving average, below which the stock fell below last week at 3,019p. Presumably, there will be a rally on Monday on the back of the latest coverage. The question is whether this can be sustained, or the takeover story is an attempt to mask the end of a great bull run for this stock market darling?