Nissin Takes 17 Percent Stake in Premier Foods After Shunning McCormick
24 Mar 2016 --- Premier Foods has rebuffed a second approach from US herbs and spices maker McCormick valuing the company at £700 million ($987 million) saying that the offer “substantially undervalued the company and its prospects”. The maker of Mr Kipling cakes has instead agreed to Japanese noodle maker Nissin taking a 17.27 percent stake in the company.
McMormick first approached Premier Foods- whose brands also include Sharwood Loyd Grossman sauce, about the day inl February this year.
The 52 pence per share was rejected by the Premier Foods board, prompting McCormick to up its offer to 60 pence a share, a bid which was also turned down.
David Beever, the chairman of Premier Foods, said: “McCormick’s proposal represents an attempt to capture the upside value embedded in Premier’s business that rightfully belongs to Premier’s shareholders.”
“The proposal fails to recognise the value of Premier’s performance to date and prospects for the future, including the strategic plans we have to accelerate growth.”
The two companies could be potential a good fit as both offer sauces.
Premier Foods has struggled with a large debt pile and has sold off key brands such as Hovis to shore up its finances.
Premier Foods has struggled with a large debt pile and has sold off key brands such as Hovis to shore up its finances.
McMormick, based in Maryland, is known for its spices, including Schwarz dried spices and seasonings.
McCormick said it would finance the deal from its existing resources couples with new debt facilities.
It said that there was no certainty that it would make a firm offer by the April 20 deadline, the date by which it needs to make a firm offer or walk away from the deal.
A tie-up between the two companies could potentially be a good fit as both offers sauces and a deal could lead to cost savings.
But Premier Foods said it was instead opting to purse a “co-cooperation agreement” with Japanese Nissin Foods.
This was followed afterwards by the announcement that Nissin would be taking a 17. 27 percent stake in the company.
Under the deal, Premier Foods will distribute Nissin’s products in the UK, while making its own products more widely available in overseas markets.
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