Shares in Premier Foods rise after Schwartz owner tables third proposal


Shares in Mr Kipling cakes firm Premier Foods jumped after Schwartz spice owner McCormick & Company tabled its third approach for the business, worth £537 million.

The US spice and herbs giant put forward a proposal worth 65p a share for Premier, which also owns Oxo, Bisto and Sharwood's.

Premier rejected McCormick's first offer of 52p in cash per share and a second at 60p in cash per share, it revealed last week, saying they ''significantly'' undervalued its future growth.

Shares jumped almost 10% in early trading.

The moves comes as it emerged this week St Albans-based 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.

The latest twist in the 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 had 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 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 that 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.

Last March, Premier Foods completed a £1.1 billion refinancing package to tackle the debt mountain which brought the firm to the brink of collapse a few years earlier.

Prices across the food industry have been falling for more than a year, driven down by competition from discount supermarkets Aldi and Lidl.

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.

Analysts at Shore Capital said Premier Foods shareholders should accept McCormick's proposal because the higher offer allows "shareholders the opportunity of a cash exit today at a reasonably full earnings valuation".