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Premier Foods shares fall 28% after suitor ends takeover talks

By Holly Williams

Published 14/04/2016

McCormick, which owns Schwartz, made three bids for Mr Kipling owner Premier
McCormick, which owns Schwartz, made three bids for Mr Kipling owner Premier
Schwartz, which is owned by McCormick

Shares in Mr Kipling cakes firm Premier Foods fell by more than a quarter after Schwartz spices owner McCormick & Company gave up on its takeover pursuit.

McCormick walked away from the negotiations after having three bid approaches - the last worth £537m - rejected by Premier. McCormick said it could not pay a price that would be accepted by the Premier board.

Shares in Premier, which also owns Oxo, Bisto and Sharwood's, fell by 28% afterwards. McCormick said: "After careful consideration, (we have) concluded that it would not be able to propose a price that would be recommended by the board of Premier Foods while also delivering appropriate returns for McCormick shareholders. Accordingly, McCormick has withdrawn its proposal."

Premier bosses insisted they saw a "strong future for an independent" company.

St Albans-based Premier found itself at the centre of a takeover saga, rejecting several offers from McCormick while agreeing a "co-operation agreement" with Japanese noodle giant Nissin Foods, which has built up a 19.9% stake in the firm.

But some investors were left disgruntled after it emerged Premier told Nissin of the bid from McCormick before notifying the rest of its shareholders. They were also angered by the board's dismissal of earlier offers.

Premier rejected McCormick's first offer of 52p in cash per share, a second at 60p and a third made at the end of March worth 65p a share, saying they undervalued the company and its future growth prospects.

However, after the third approach, the Premier board agreed to open talks for the first time with McCormick.

Premier said it appreciated McCormick's "open and collaborative spirit" in discussions.

Shares in the company had almost doubled since McCormick's takeover interest first emerged.

Premier said it believed its "longer-term prospects will be enhanced by the co-operation agreement it has signed with Nissin Foods".

The agreement could see Nissin'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 company bought its stake in the UK food firm from private equity group Warburg Pincus, upping the holding from 17.3% to 19.9% at the end of March.

Nissin Foods - which invented the first instant noodles in 1958 - trades across 19 countries and has annual revenues of $3.8bn (£2.6bn). Its products include Cup Noodles and Top Ramen.

The abortive takeover bid is part of a spurt of corporate activity in the food business.

Sausage maker Cranswick this week bought over Crown Chicken in a £40m deal - and is also tipped to have approached Dungannon-based meat firm Dunbia to buy its pig-processing division.

And Dunbia, run by brothers Jim and Jack Dobson, is reported to be in talks with UK food giant 2 Sisters over a joint venture in red meat.

Belfast Telegraph

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