McCormick Confirms Premier Foods Approach
March 23 2016 - 11:50AM
Dow Jones News
LONDON—U. S. based spice maker McCormick & Co. Wednesday
confirmed it had made a takeover approach of roughly $670 million
for British food manufacture Premier Foods PLC, which was
subsequently rejected.
The confirmation came after Premier broke the news earlier in
the day, saying it had received a total of two approaches from
McCormick. The first offer, Premier said, came on Feb. 12 and was
pitched at 52 pence a share in cash, valuing Premier at 462 million
pounds ($653 million). The second offer arrived on March 14 and
represented an increase of 15%, valuing Premier at 60 pence a
share.
Premier said both offers undervalued its growth prospects.
However McCormick said in its response that the second offer
represented a 90% premium on Premier's closing share price of 31.5
pence on Tuesday, and believes that, even though the bid has been
rejected at board level, it should be well-received by Premier's
shareholders.
McCormick, which already sells spices and flavorings in the U.K.
under the Schwartz brand, said the acquisition of Premier is
consistent with its long-term strategy and, if completed, will
increase its presence in the U.K. grocery market.
The Maryland-based company also said the sweetened offer
provides Premier shareholders with an attractive premium, combined
with the certainty of a cash value. But this was refuted by
Premier, which said the increased offer represented an insufficient
premium on its total value, which includes allowances for debt and
pension obligations.
"McCormick's proposal represents an attempt to capture the
upside value embedded in Premier's business that rightfully belongs
to Premier's shareholders," Premier Chairman David Beever said.
"The proposal fails to recognize the value of Premier's
performance to date and prospects for the future, including the
strategic plans we have to accelerate growth," Mr. Beever
added.
McCormick didn't reveal its next move, and cautioned that no
firm offer is certain. Under U.K. takeover rules, McCormick is
required to make a firm bid for Premier by April 20 or withdraw its
offer.
The U.S. firm is being advised by Goldman Sachs and Rothschild,
while Premier is being advised by HSBC, Jefferies, Credit Suisse
and Ondra Partners.
Premier shares soared on the takeover approach and are currently
trading around 52 pence each, up 65.9%.
In an effort to protect its independence, Premier also said
Wednesday it is making new investments to accelerate growth and has
signed a cooperation agreement with Japanese noodle maker Nissin
Foods Holdings Co. Ltd. (2897.TO).
Premier, based in the county of Hertfordshire in southern
England, said it is investing to introduce new twin packs of cake
slices, and expand its cake brands in the U.S. and other parts of
the world.
The company, best known for its Mr. Kipling cup cakes and Loyd
Grossman sauces, said it plans to extend its brands into
premium-food categories.
The company's tie-up with Nissin is conditional upon no takeover
bid for the company succeeding. Under the deal, Premier would be
able to distribute Nissin's products in the U.K., while making its
own products available in overseas markets.
Write to Tapan Panchal at Tapan.Panchal@wsj.com
(END) Dow Jones Newswires
March 23, 2016 11:35 ET (15:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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