PFD Premier Foods Plc

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)

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