FDBusiness.com

The board of Premier Foods has rejected two approaches from McCormick & Company, the US-based specialist in flavour technology, on the basis that they significantly undervalue the British food group and its prospects. The first approach was at an indicative price of 52 pence in cash per Premier share. The revised bid was for 60 pence in cash per share, valuing Premier Foods’ equity at about £495 million.

David Beever, chairman of Premier, says: “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.”

In accordance with the Takeover Code, McCormick is required, by not later than 5.00 pm on 20 April 2016, either to announce a firm intention to make an offer for Premier Foods or that it does not intend to make an offer.

The board of Premier Foods sees a strong future for an independent company and believes that the foundations have been laid for significant growth and shareholder value creation. Premier Foods 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.

Over recent years, Premier Foods has discussed a number of potential strategic opportunities with Nissin Foods Holdings of Japan.

With annual revenues of around US$3.8 billion and operating profit of around US$216 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 Premier board has now agreed to enter into a co-operation agreement with Nissin conditional upon: Premier no longer being subject to an offer period under the Takeover Code; and 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.

Gavin Darby, chief executive of Premier Foods.

Gavin Darby, chief executive of Premier Foods, comments: “This is an exceptional opportunity for us to gain a major strategic partner which understands our business and supports our growth ambitions. We look forward to working with Nissin to explore ways our two businesses can cooperate to better serve both our customers and our shareholders.”

Nissin Food Holdings Co has unconditionally agreed to acquire a 17.27% shareholding in Premier Foods from an existing shareholder. Premier and Nissin are seeking to finalise the terms of a Relationship Agreement, conditional on completion by Nissin of the acquisition and Premier no longer being in an offer period.

David Beever adds: “We welcome Nissin as a new long-term shareholder in our business.  By gaining a strategic investor who understands and supports our growth ambitions, we have an exceptional opportunity to deliver shareholder value.”