Premier Foods poised for fresh takeover bid from US firm McCormick
Mr Kipling cakes firm Premier Foods is poised for a fresh takeover bid from an American suitor after snubbing its previous two offers.
US spice and herbs giant McCormick & Company said it would be willing to up its bid for the firm as it urged Premier's board to discuss its approach with shareholders.
Premier rejected McCormick's first offer of 52p in cash per share, and a second at 60p in cash per share, because they "significantly" undervalued its future growth.
The latest twist in the takeover saga comes as Premier Foods revealed noodle giant Nissin Foods had bought a 17.27% stake in the business at 63p per share.
Premier announced on Wednesday that it was joining forces with Nissin in a "co-operation agreement" to bolster growth overseas and develop new products.
Nissin Foods - which invented the first instant noodles in 1958 - trades across 19 countries and has annual revenues of 3.8 billion US dollars (£2.6 billion) and an operating profit of 216 million US dollars (£152 million). Its products include Cup Noodles and Top Ramen.
In a statement, McCormick said its current 60p in cash per share offer gives Premier an enterprise value, which includes debts and pension obligations, of £1.5 billion.
The US firm said: "McCormick is disappointed that the board of Premier Foods is conducting itself in a way that denies Premier Foods' shareholders the opportunity to consider McCormick's highly attractive cash offer."
It added: "McCormick is, however, willing to consider increasing its latest offer if justified following its confirmatory due diligence."
Premier Foods stood by its decision not to consider a deal at 60p in cash per share, but was open to an "improved proposal" that met the board's valuation of the company.
Under takeover rules, McCormick now has until 5pm on April 20 to make a firm offer for the business or pull out of its pursuit.
Dr Hossam Zeitoun, of Warwick Business School, said: "Premier Foods' deal with Nissin will help it pursue its turnaround strategy and avoid a hostile takeover by McCormick. This co-operation will be another obstacle for McCormick and would make it even more difficult for the US company to complete a takeover."