McPherson's rallies on acquisitions

Personal and household products supplier McPherson’s (MCP) has given something to investors to cheer about with the stock enjoying its best gain in 1½ months after management announced two acquisitions.

The stock jumped 2.7% to $1.35 this afternoon following the company’s claims that the buyouts will add around $50 million to its topline in 2013-14.

The deals are consistent with its strategy to diversify its business within two key divisions, which are health & beauty and home appliances.

McPherson’s will buy skincare brand Dr LeWinn’s and beauty treatment brand Revitanail from iNova Pharmaceuticals with the acquisition expanding sales of its existing health & beauty division by 20%.

The company will also add Think Appliances and the Baumatic brand to its stable and anticipates the acquisition to increase group revenue by about $30 million a year.

McPherson’s did not reveal the costs of the acquisitions but said they will be funded through existing company resources.

McPherson’s has been under pressure for most of this year due to its downbeat outlook and write-downs it had to take due to the divestment of its struggling printing business.

However, expectations are set low for the stock, which is forecast to generate an yield of around 10%.

McPherson’s is part of the Uncapped 100.