Premier said the bid from the US spices and herb manufacturer represented “an insufficient premium to Premier’s enterprise value”.
The manufacturer’s investment-led strategy was “starting to deliver results” and new strategic initiatives were expected to “accelerate growth trajectory”, said the firm.
Premier said its co-operation with Nissin would create long-term value through strategic partnership of brands, markets and technology.
‘Rightfully belongs to Premier’s shareholders’
Premier chairman David Beever said: “McCormick’s proposal represents an attempt to capture the upside value embedded in Premier’s business that rightfully belongs to Premier’s shareholders.
“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. McCormick's proposal significantly undervalues the business and the board has unanimously decided to reject it.”
The statement followed what the manufacturer described as “an unsolicited, non-binding and highly conditional approach from McCormick & Company” on February 12 2016 for Premier’s shares at a price of 52p in cash per share.
Premier acknowledged the offer was above the current share price at the time of the bid. But it urged shareholders to consider the bid in the context of the manufacturer’s enterprise value, which included allowances for financial debt and ongoing pension obligations.
‘Insufficient premium’
“On this basis, the offer represents an insufficient premium which, in the board’s view, does not fairly reflect the benefit to McCormick of gaining control of Premier,” said management.
Premier Foods also revealed it had agreed a partnership with Nissin to distribute the Japanese noodle firm's products in this country. As part of the deal, Premier's products will become more widely available in overseas markets.
Meanwhile, the manufacturer planned to write-off fully its remaining investment in Hovis of about £8M. But Premier intended to retain its 49% share in the Hovis business and maintain its joint venture partnership with the Gores Group. The US group acquired a controlling interest in Hovis in January 2014.
Earlier this month Premier appointed a new international boss, Jette Andersen, to spearhead growth in export sales.
In the analyst’s view
“In a move that has got investors hungry for more, Premier Foods surged by a whopping 48% as it rejected a takeover bid from McCormick & McCormick in favour of a ‘co-operation agreement’ with Japan’s Nissan Foods. Mr Kipling would surely be impressed by the move, Premier Foods now back at levels not seen since the post-Tory election win surge of last May.”
- Connor Campbell, senior market analyst at www.spreadex.com