Belfast Telegraph

Exceedingly good news for investors in Mr Kipling firm Premier Foods

Mr Kipling cakes firm Premier Foods revealed it has snubbed a takeover approach from an American suitor and announced a tie-up with noodle-giant Nissin Foods.

Premier shares soared more than 47% when it revealed it had turned down an approach by US food group McCormick & Company because it "significantly" undervalued its future growth.

But the firm - which also owns brands including Oxo and Bisto - said it was joining forces with noodle-maker Nissin Foods in a "co-operation agreement" to bolster growth overseas and develop new products.

David Beever, c hairman of Premier Foods, said McCormick's bid attempted to capture the value in the business " that rightfully belongs to Premier's shareholders".

He added: "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."

Premier Foods rejected two approaches by American spice and condiment maker McCormick & Company, valuing the company at as much as £495 million.

It rejected a first approach by McCormick & Company on February 12 at 52p in cash per share, which was followed up with a second proposal on March 14 at 60p in cash per share.

The company said that while the offer is "significantly above" its current share price, it did not meet the firm's enterprise value, which includes financial debt and pension obligations.

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.

Premier Foods said it had a "strong future" as an independent business and has laid the foundations to expand significantly and boost shareholder value.

It comes as the company said its deal with Nissin Foods would accelerate the growth of the business by capitalising on the noodle-maker's overseas empire.

Gavin Darby, chief executive of Premier, said: "This is an exceptional opportunity for us to gain a major strategic partner which understands our business and supports our growth ambitions."

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.

Premier Foods said the deal will allow it to access Nissin's products and formats to distribute into the UK market, while using Nissin's foothold overseas to accelerate the growth of its products.

Despite being rebuffed, McCormick said it still believed in the rationale for a combination of the two firms.

The group added it believed its revised 60p-a-share proposal should be "well received by Premier Foods' shareholders, employees, pensioners and other stakeholders".

It had hoped the sweetened approach would lead to "prompt and full engagement from Premier Foods", the firm added.