Church & Dwight Experiences Unusual After-Hours Volatility

Shares of Church & Dwight Co., Inc. (NYSE: CHD) saw some unusual trading activity in Tuesday's post-market session.

The stock experienced volatile trade during the intra-day session, and closed down about a percent at $95.53. Shortly after the close at 4 p.m. EDT, investors started seeing some large indications higher. The stock price was briefly indicated at what would be a new 52-week high of $99.16, before quickly moving back to a more normal level. Church & Dwight shares were last indicated at $95.59, up about a tenth of a percent from the close.

Some traders suggested caution amid the after-hours volatility as the company was the target of some unconfirmed chatter early in Tuesday's session: interest from Procter & Gamble Co (NYSE: PG).

Both Church & Dwight and P&G were not available for response throughout Tuesday's session.

Is Church & Dwight A Viable Takeover Candidate?

Bloomberg Gadfly's Tara Lachapelle opined about Church & Dwight's deal-talk status back on March 1. The columnist noted the company could be either a buyer or seller in this M&A marketplace. She said a takeover would be "the best time to sell yourself is when your valuation is high. In either case, don't be surprised if Church & Dwight soon appears on the deal radar."

In a May 13 note, A JP Morgan analyst commented on valuations across the U.S. Beverages and Household Products group, and painted a picture where the stocks of multi nationals were cheaper than domestic names.

"There are only two stocks in our coverage universe where the P/E on NTM EPS has moved down since the end of 2013, TUP and NUS. For the rest of our companies, the average P/E has moved up 23% since then, although the multi-nationals (KO, PEP, PG, KMB, CL) remain cheaper than the domestic safety names (CHD and CLX, although DPS is cheaper)."

UPDATE (~8 a.m. EDT, May 18, 2016): A Sterne Agee CRT analyst commented Wednesday morning that although a Church & Dwight and P&G deal "would be surprising," "never say never."

"Despite overlap in key categories (Laundry, Oral Care, Hair Care), PG hasn't yet completed its 100 Brand Purge (Coty deal yet to close) & is likely to spend the next 12-18 months stabilizing its core & increasing margin potential before adding meaningful complexity (a brand take-out does seem possible). further, CHD has been talking about its desire for transformational M&A given $2.5bn firepower," according to the Sterne Agee CRT analyst.

"... we've historically noted that CHD could be attractive to one wanting strong US exposure/relationships & it's one of the few names in our group small enough to get taken out..."