Mon, 04 Apr 2016 | BUSINESS SALE
The food manufacturer behind famous British brands such as Mr Kipling, Bisto and Ambrosia has said an offer from US spice and sauce maker McCormick is too low, but it is open to negotiations.
Premier Foods is in the process of talks with its state-side suitor, but has said that McCormick’s offer of 65p per share in cash, which values the business at around £1.5 billion, “continues to undervalue Premier [Foods] and its prospects.”
Nevertheless, increased pressure from shareholders has forced the board of directors at Premier Foods to go back to the negotiations table in the hope that “McCormick will increase its offer price to a recommendable level”.
According to Premier Foods, McCormick is open to further discussions and that a revised proposal is on the cards in the near future. Premier Foods went so far as to say: “The board has informed McCormick that it will be expected to provide an improved proposal following these meetings.”
News of the proposed takeover sent shares in the British food manufacturer skyrocketing by more than 70 per cent, with each share rising nearly 7 per cent to 60.4p in late March 2016.
Two of Premier Foods’ biggest shareholders — Standard Life and Paulson & Co — have urged the board to further its talks with McComick. The British company had already rejected to previous bids of 52p and 60p per share earlier last month.
Premier Foods found itself in distress when it accumulated large amounts of debt after purchasing a series of other food brands before the financial crisis of 2007-08. Since then, it has subsequently sold Hovis, Hartley’s and other well-known brands, as well as carrying out a £1.1 billion refinancing.
In late March 2016, Nissin became Premier Foods’ largest shareholder and is expected to take a seat on the British food manufacturer’s board.
A statement from McCormick said: “McCormick continues to believe that, with its 127-year heritage, it would be an outstanding custodian for the Premier Foods brands and, with the strength of its balance sheet, can provide benefits for Premier Foods, its pensioners, creditors and other stakeholders, which Premier Foods’ current capital structure cannot deliver with or without the proposed cooperation with Nissin Foods.”
For more information, see other food manufacturers and brands for sale.
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