Premier Foods rejects third takeover bid worth £537m
Mr Kipling cakes firm Premier Foods has rejected the third takeover offer from Schwartz spice US owner McCormick & Company, worth £537 million.
The spice and herbs giant put forward a proposal worth 65p a share for Premier, which also owns Oxo, Bisto and Sharwood's.
The board of the St Albans-based firm said the proposal "continues to undervalue Premier and its prospects".
However, the Premier board agreed to open talks for the first time with McCormick to discuss its current trading and liabilities, and "establish whether McCormick will increase its offer price to a recommendable level".
Premier rejected McCormick's first offer of 52p in cash per share and a second at 60p in cash per share, both times saying they ''significantly'' undervalued the firm's future growth.
Shares lifted 7% in afternoon trading.
The moves comes as it emerged this week Premier told Japanese noodle giant and new key investor Nissin Foods of the bid from McCormick before notifying the rest of its shareholders, a move that left existing investors disgruntled.
Earlier today, the latest twist in this takeover saga saw McCormick sweeten its latest proposal and urge the Premier board to open talks and "engage fully" with it over its takeover offer.
The US firm said: "McCormick continues to believe that, with its 127-year heritage, it would be an outstanding custodian for the Premier Foods brands."
It said its deal would be attractive whether Nissin continued to co-operate with Premier or not.
It also emerged Nissin had upped its stake in Premier Foods to 19.9% at 63p per share on Tuesday, from a 17.3% holding it snapped up last week.
Nissin said it bought its stake in Premier Foods as part of a co-operation agreement, which could see Nissan's products distributed in the UK and Premier taking advantage of the Japanese firm's international distribution network.
Nissin has also agreed not to attempt to buy Premier Foods for six months, unless another group makes a firm bid for the UK food business.
The Japanese firm bought its stake in the UK food firm from private equity group Warburg Pincus.
A spokesman for Premier reportedly said: "Nissin was aware of the approach from McCormick because it was essential before committing to the commercial collaboration.
"Premier Foods, believing the offer did not value the company, moved to pursue more value-creating opportunities".
Premier Foods also issued a clarification statement on Wednesday, which said its chief executive Gavin Darby was not aware of any discussions McCormick may have held with Warburg Pincus, adding it was open to the buyout group to sell its holding in Premier to any group it chose.
In a statement, McCormick said its current 65p in cash per share offer gives Premier an enterprise value, which includes debts and pension obligations, of £1.5 billion.
Maryland-based McCormick has annual sales of 4.3 billion US dollars (£3 billion) and owns the Schwartz seasoning brand in the UK as well as its classic McCormick herbs and spices in the US.
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). Its products include Cup Noodles and Top Ramen.