Papa Murphy’s (FRSH) Stock: Flying On Merger News

Papa Murphy’s Holdings Inc (NASDAQ: FRSH) is having an incredibly strong start to the trading session this morning, and for good reason. The company announced a definitive merger agreement, under which it will be acquired at a premium.

As you could imagine, the news excited investors who are pushing the stock for the top. Today, we’ll talk about:

  • The merger news;
  • what we’re seeing from FRSH stock as a result; and
  • what we’ll be watching for ahead.

FRSH Stock Gains On Merger News

As mentioned above, Papa Murphy’s is having a great day in the market today after announcing that it has entered into a definitive merger agreement. The agreement was announced early this morning by way of press release.

According to the release, MTY Food Group has agreed to acquire all issued and outstanding shares of Papa Murphy’s. The acquisition will take place at a price per FRSH share of $6.45, bringing the total price to $190.0 million when you include Papa Murphy’s debt. This price sets a premium of 31.9% to the company’s closing price on April 10, 2019 and a 46.3% premium to the closing price on November 7, 2018, when the company announced that it was conducting a strategic options exploration.

In a statement, Eric Lefabvre, CEO at MYT, had the following to offer:

This is an important transaction for MTY as we add a brand with a differentiated position in pizza to our existing U.S. portfolio. We are thrilled about the prospect of welcoming the Papa Murphy’s brand, its franchise partners and employees, to the MTY family. Papa Murphy’s is a unique concept with over a 35 year history of providing a superior quality product made with fresh ingredients.

We believe the pizza segment is highly attractive due to its size, fragmented nature and growth potential. The Papa Murphy’s brand is well loved by its loyal customers and is supported by a strong network of franchise partners. We expect the combination of these two companies and the expertise it brings to produce tremendous opportunities for MTY’s U.S. expansion objectives.

The above statement was followed up by Jean Birch, Chairperson of the board of directors at FRSH with the following:

The board of directors and our advisors have thoroughly evaluated all options available to us and are confident that this agreement provides immediate value to our stockholders at a premium over our current share price.

Merging our unique, differentiated brand with a global leader in franchised restaurant concepts will accelerate on-going efforts to enhance our convenience and relevance and maintain our position as the number one Take ‘n’ Bake pizza chain in the United States.

What We’re Seeing From The Stock 

One of the first lessons that we learn when we start to work in the market is that the news leads to moves. In the case of Papa Murphy’s, the news proved to be overwhelmingly positive.

After all, not only will the company be acquired, it will take place at a more than 30% premium. That’s an immediate return of value for shareholders!

Considering this, it’s not surprising to see that excited investors have pushed the stock to the top. At the moment (9:45), FRSH is trading at $6.42 per share after a gain of $1.53 per share or 31.29% thus far today.

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What We’ll Be Watching For Ahead

Moving forward, the CNA Finance team will continue to keep a close eye on FRSH. While the agreement is definitive, anything can happen from now to closing. Nonetheless, we’ll keep a close eye on the story and bring the news to you as it breaks!

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