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RNS Number : 9965S
Premier Foods plc
23 March 2016
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR
INDIRECTLY (IN WHOLE OR IN PART), IN, INTO OR FROM ANY JURISDICTION
WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF
THAT JURISDICTION. THIS ANNOUNCEMENT DOES NOT CONSTITUTE A TAKEOVER
OFFER OR AN OFFER OF SECURITIES.
23 March 2016
For immediate release
Premier Foods plc
Premier Foods plc rejects approach from McCormick & Company,
Inc. and announces Cooperation Agreement with Nissin Foods Holdings
Co., Ltd.
-- McCormick approach significantly undervalues Premier's growth
prospects and represents an insufficient premium to Premier's
enterprise value
-- Investment-led strategy starting to deliver results
-- New strategic initiatives expected to accelerate growth trajectory
-- Cooperation Agreement with Nissin to create long-term value
through strategic partnership of brands, markets and technology
-- Update on Hovis Holdings Ltd and Knighton Foods Ltd joint ventures
-- Board's expectations of Trading Profit for full year remain unchanged
The Board of Premier Foods plc ("Premier" or the "Company")
confirms that it received an unsolicited, non-binding and highly
conditional approach from McCormick & Company, Inc.
("McCormick") on 12 February 2016 regarding a possible offer for
the entire issued, and to be issued, ordinary share capital of the
Company at an indicative price of 52 pence in cash per Premier
share. This approach was rejected on the basis that it
significantly undervalued the Company and its prospects. The Board
received a subsequent approach on 14 March 2016 with a revised
possible offer for the entire issued, and to be issued, ordinary
share capital of the Company at an indicative price of 60 pence in
cash (the "Indicative Price") per Premier share (the "Proposal").
This approach has also been rejected on the basis that it
significantly undervalues the Company and its prospects, and
therefore the Board does not consider that the Proposal would be in
the best interests of Premier and its shareholders.
Commenting on the approach David Beever, Chairman of Premier,
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.
McCormick's Proposal significantly undervalues the business and
the Board has unanimously decided to reject it."
McCormick's Proposal represents an insufficient premium to
Premier's enterprise value
Whilst the price per share indicated in McCormick's Proposal is
significantly above the current share price, due to Premier's
specific capital structure, the Board considers that shareholders
should evaluate the premium implicit in McCormick's Proposal with
reference to Premier's enterprise value (which includes allowances
for financial debt and ongoing pension obligations). On this basis,
the offer represents an insufficient premium which, in the Board's
view, does not fairly reflect the benefit to McCormick of gaining
control of Premier.
Furthermore, the Board does not believe that the multiple of
enterprise value to EBITDA implied in McCormick's Proposal fairly
reflects the Company's growth prospects. The Board considers that
the Net Present Value of the future cash flows expected to arise
from the Company's growth plans outlined below would imply a price
per share significantly above the Indicative Price.
In accordance with Rule 2.6(a) of Takeover Code (the "Code"),
McCormick is required, by not later than 5.00 p.m. on 20 April
2016, either to announce a firm intention to make an offer for the
Company in accordance with Rule 2.7 of the Code or announce that it
does not intend to make an offer, in which case the announcement
will be treated as a statement to which Rule 2.8 of the Code
applies. This deadline can be extended with the consent of the
Takeover Panel in accordance with Rule 2.6(c) of the Code.
There can be no certainty that any offer will be made nor the
terms on which any such offer might be made. Premier shareholders
are strongly advised to take no action in respect of the
Proposal.
This announcement is being made by Premier without the prior
agreement or approval of McCormick.
Investment-led strategy starting to deliver results
The Board sees a strong future for an independent Premier and
believes that the foundations have been laid for significant growth
and shareholder value creation.
Premier has a strong and valuable portfolio of market leading
brands, extensive distribution across key retail channels, a
well-invested manufacturing base and strong operational cash
flows.
Under the strong leadership of CEO, Gavin Darby, Premier has
assembled a highly experienced management team that has
successfully restructured the business and put in place an
investment-led growth strategy that is already starting to deliver
results.
-- Since 2014, the Company has more than doubled its rate of new
product innovation, launching a wide range of new products,
packaging formats and line extensions to meet changing consumer
trends.
-- Premier expects to increase significantly its investment in
consumer marketing from approximately GBP25 million in the 2013/14
financial year to approximately GBP36 million in the 2015/16
financial year.
-- The investments behind some of the biggest brands including
Mr. Kipling, Cadbury cakes, Oxo and Bisto, delivered gains in
volume, value, market share and household penetration in 2015(1)
.
-- The Company is driving growth in channels beyond the
supermarkets, including discounters, online and international.
The Board believes that, by extending this strategy to its other
brands, the Company will deliver further growth in the future. The
Board further considers that the step-up over the last two years of
the Company's investment in brand marketing and product innovation,
against the background of a challenging UK food retail environment,
means that the Company is at an inflection point in terms of its
longer-term growth prospects.
New strategic initiatives to accelerate growth
The Company has additionally identified a number of new
strategic initiatives to help accelerate growth across its three
Business Units of Grocery, Sweet Treats and International. Whilst
these initiatives are expected to incur initial upfront investment
of GBP2-4 million in the full year 2016/17, the Company is now
raising its sales growth guidance for the medium term from 1-2% to
2-4%.
The new initiatives will leverage the Company's existing
platforms, infrastructure and brand presence to expand further into
new formats, channels and markets:
-- In Sweet Treats, we plan to build on the successful trial of
our Cake-To-Go range of Mr. Kipling twin pack slices and Cadbury
mini roll twin pack by accelerating growth of our brands in broader
convenience channels; to do so, we will capitalise on our
manufacturing investments, innovation expertise and dedicated new
team.
-- In Grocery, we intend to extend our strong brands into
premium areas within the chilled grocery sector in the sweet and
savoury segments, including product ranges to meet consumers'
growing health-consciousness.
-- In International, we plan to leverage the investment we have
already made in hiring an experienced team to step-change the size
of our international business. Our focus will be on accelerating
the expansion of our cake brands in the US and other geographies
using our differentiated offering, unique formats and packaging.
Initial store trials have demonstrated the potential for future
growth in these markets.
Cooperation agreement with Nissin Foods Holdings Co., Ltd.
("Nissin")
Over recent years, Premier has discussed a number of potential
strategic opportunities with Nissin. The Board has now agreed to
enter into a cooperation agreement with Nissin (the "Cooperation
Agreement"), conditional upon: (i) Premier no longer being subject
to an offer period under the Code; and (ii) no third party having,
by the date on which such offer period expires, announced that any
offer for Premier has become or been declared unconditional as to
acceptances or that a scheme of arrangement has become
effective.
With annual revenues of around USD3.8 billion and operating
profit of around USD216 million, Nissin, which invented the world's
first instant noodles in 1958, operates in 19 different countries,
spanning Asia Pacific, the Americas, Europe, Middle East and
Africa. It is a global leader in instant noodles holding the number
one or two positions in key markets, including Japan, the United
States and Brazil and has a growing presence in chilled and frozen
foods, cereal-based confectionery and yoghurt beverages in Japan.
Nissin's presence in Europe includes Hungary, Germany and Spain,
with brands such as Cup Noodles, Soba and Top Ramen. It also
benefits from a state-of-the-art global research and innovation
centre in Japan that develops more than a thousand new products
that are distributed around the globe every year and has
significant expertise in starch technologies, sodium reduction and
production techniques.
The new strategic partnership has the potential for significant
long-term value creation for both organisations through strategic
cooperation in areas which may include:
-- Providing Premier with access to Nissin's innovative products
and formats to distribute in the UK market under either Nissin's or
Premier's brands, such as Batchelors.
-- Enabling Premier to benefit from Nissin's international scale
to accelerate the distribution of Premier's products in key
overseas markets.
-- Sharing of Nissin's significant intellectual property,
innovation and technical know-how to develop new products.
March 23, 2016 04:00 ET (08:00 GMT)
Ondra Partners, which is authorised by the Prudential Regulation
Authority and regulated in the United Kingdom by the Financial
Conduct Authority and the Prudential Regulation Authority, is
acting as financial adviser exclusively for Premier and for no-one
else in connection to the matters in this announcement and will not
be responsible to anyone other than Premier for providing the
protections afforded to its clients nor for providing advice in
connection with the Offer or any matter referred to herein.
Jefferies International Limited ("Jefferies"), which is
authorised and regulated in the United Kingdom by the Financial
Conduct Authority, is acting exclusively for Premier as financial
adviser and corporate broker and no-one else in connection with the
Proposal and Jefferies will not regard any other person as its
client(s) of Jefferies in connection to the matters in this
announcement and will not be responsible to anyone other than
Premier Foods for providing the protections afforded to its clients
or for providing advice in connection to the matters in this
announcement, the contents of this announcement or any transaction,
arrangement or other matter referred to in this announcement.
Credit Suisse International (Credit Suisse), which is authorised
by the Prudential Regulation Authority and regulated in the United
Kingdom by the Financial Conduct Authority and the Prudential
Regulation Authority, is acting exclusively for Premier Foods and
no one else in connection with the matters in this announcement and
will not be responsible to anyone other than Premier Foods for
providing the protections afforded to clients of Credit Suisse nor
for providing advice in relation to the Offer , the content of this
announcement or any other matter referred to herein. Neither Credit
Suisse nor any of its subsidiaries, branches or affiliates owes or
accepts any duty, liability or responsibility whatsoever (whether
direct or indirect, whether in contract, in tort, under statute or
otherwise) to any person who is not a client of Credit Suisse in
connection with this announcement, any statement contained herein
or otherwise.
Rule 2.10 of the Code
In accordance with Rule 2.10 of the Code, Premier confirms that,
as at close of business on 22 March 2016, it had in issue
826,567,063 ordinary shares of 10 pence each. Premier does not hold
any shares in treasury. The International Securities Identification
Number for Premier ordinary shares is GB00B7N0K053.
Publication on websites
A copy of this announcement will be made available, subject to
certain restrictions relating to persons resided in restricted
jurisdictions on Premier's website at www.premierfoods.co.uk by no
later than 12 noon (GMT) on 23 March 2016.
The content of the website referred to in this announcement is
not incorporated into and does not form part of this
announcement.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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