US spice maker McCormick & Co. has returned with a higher proposed offer for Premier Foods plc, on the condition the Mr Kipling maker opens its books.
McCormick said this morning (30 March) it would be willing to pay 65 pence per share for Premier, which has already turned down two takeover approaches from the US group. Premier revealed the interest from McCormick last week and also announced a “co-operation agreement” with Japan’s Nissin Foods Holdings, which has since snapped up a stake in the UK business.
The revised proposal compares to McCormick’s most recent approach of 60 pence per share. It values Premier at an enterprise value of approximately GBP1.5bn (US$2.16bn) and represents a 106% premium on the UK group’s share price prior to McCormick’s interest entering the public domain last Wednesday. The new proposal would deliver an implied exit multiple of 10.6x pro forma 2015 EBITDA, McCormick added.
McCormick said it expected the new proposal to be “well received” by Premier’s shareholders. The company said it believes its ownership can provide benefits Premier’s “current capital structure cannot deliver with or without the proposed co-operation with Nissin Foods”.
However, McCormick said its new approach was conditional on “prompt and full engagement” from Premier. McCormick wants to complete some due diligence, which comprises of a review of material pensions documentation, current trading and material contracts.
“McCormick calls on the board of Premier Foods to now engage fully with McCormick to agree a recommended offer, which will offer all shareholders the opportunity of a cash exit at a full valuation of the company,” the US company said.
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Nissin, for its part, has taken a 17% stake in Premier in a move that provides it with the right to appoint a non-executive director to the firm’s board. The deal will, for example, see the two companies work to “accelerate the distribution” of Premier’s products in key overseas markets. The UK group 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.
However, Premier’s board has come under fire from shareholders for rejecting the approaches from McCormick and has since insisted that it is open to “improved proposals” from all parties.
Premier has made no statement this morning on McCormick’s latest proposal. Shares in Premier were up 6.75% at 60.31p at 09:45 BST.
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