Blog: Dean BestTakeover interest in Premier Foods sends ripples around Consumer Analyst Group Europe conference

Dean Best | 23 March 2016

The takeover interest in Premier Foods plc was a hot topic of conversation among delegates at the Consumer Analyst Group Europe conference today (23 March) - not least because the UK group pulled out of presenting at the event this afternoon.

Premier Foods was set to be among the companies to take the stage on the third and final day of this year's CAGE - but did not attend in the wake of its announcement this morning of two approaches from McCormick & Co., the US condiments and spices maker.

As soon as Premier's stock exchange announcement hit the wires at 08:00 UK this morning, the chances were CEO Gavin Darby and finance director Alastair Murray, who were due to present at CAGE, would not attend.

And so it transpired. Talking to delegates on the sidelines of CAGE, there was a sense of uncertainty about why McCormick would moved for Premier Foods, a business that generates the bulk of its sales in the mature, fiercely competitive UK grocery markets and with a portfolio larger in lower-growth, centre-store categories.

Later this afternoon, in its own announcement to the market, McCormick set out why it had expressed interest in Premier Foods and defended the proposed offers the UK group had rejected.

Alongside Premier Foods' announcement to the London Stock Exchange this morning, the UK group said it had agreed to enter a co-operation agreement with Japan's Nissin Foods Holdings. As part of the deal, the two companies will work to "accelerate the distribution" of Premier Foods' products in key overseas markets. Premier Foods said the agreement could also give it "access to Nissin's innovative products and formats" to distribute in the UK market under both the companies' brands.

Premier Foods also revealed it is considering entering into what is called under UK Stock Exchange rules a conditional "relationship agreement" with Nissin. Such an arrangement could give Nissin the right to appoint a non-executive director to the Premier Foods board should the Japanese group take a minimum 15% stake in the company.

Premier Foods' tie-up with Nissin is conditional on the UK group no longer being subject to an offer period under the country's Takeovers Code and no suitor having announced that any offer had become unconditional.

As one delegate at CAGE remarked to just-food, the potential tie-up with Nissin is another example of Japanese interest in consumer sectors in Europe and the UK.

Of course, there have been transactions involving Japanese companies for several years, including, for example the 1989 acquisition of UK food and drinks group Princes by Mitsubishi Corp.

There have also been more recent moves, not least the acquisition of UK soft drink brands Lucozade and Ribena by Suntory Food & Beverage in 2014.

Two years earlier, Premier Foods sold its vinegar and sour pickles business, including the Sarson's and Haywards brands, to Japanese food group Mizkan.

And, this year, Anheuser-Busch InBev confirmed receipt of an offer from Japan's Asahi Group to buy the Grolsch, Meantime and Peroni Nastro Azzuro beer brands from the the world's largest brewer ahead of its own move to buy SABMiller.

It is, of course, no secret Japanese companies are continuing to look to make their businesses more international to offset slow growth back home.


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