Premier shares down after failed takeover attempt

McCormick walked away from the takeover tussle after having three bid approaches worth up to £537m rejected by Premier, saying it could not pay a price that would be accepted by the Premier board.

Shares in Premier - which also owns Oxo, Bisto and Sharwood’s - slumped 28 per cent as investors were left disappointed.

McCormick said it had, “after careful consideration, concluded that it would not be able to propose a price that would be recommended by the board of Premier Foods while also delivering appropriate returns for McCormick shareholders”.

“Accordingly, McCormick has withdrawn its proposal to acquire Premier Foods,” it added.

Premier bosses insisted they see a “strong future for an independent Premier Foods”.

St Albans-based Premier found itself at the centre of a takeover saga, rejecting several offers from McCormick while agreeing a “co-operation agreement” with Japanese noodle giant Nissin Foods, which has built up a 17 per cent stake in Premier.

But some investors were left disgruntled after it emerged Premier told Nissin of the bid from McCormick before notifying the rest of its shareholders, while they were also angered by the board’s dismissal of earlier offers.

McCormick first approached Premier Foods in February with a proposal at 52 pence per share, which Premier rejected as too low. McCormick then proposed 60 pence, which was also rejected.

Premier rejected a third offer made at the end of March worth 65p a share, saying they undervalued Premier and its future growth prospects.

However, after the third approach, the Premier board agreed to open talks for the first time with McCormick.

Premier said it had “engaged extensively” with McCormick to provide it with the information requested, adding that the board “appreciates the open and constructive spirit in which the engagement with McCormick was conducted”.

Shares in Premier had almost doubled since McCormick’s takeover interest first emerged.

Premier said it believed its “longer-term prospects will be enhanced by the co-operation agreement it has signed with Nissin Foods”, enabling it to expand overseas.

The agreement could see Nissin’s products distributed in the UK and Premier taking advantage of the Japanese firm’s international distribution network.

Nissin has agreed not to attempt to buy Premier Foods for six months, unless another group makes a firm bid for the UK food business.

The Japanese firm bought its stake in the UK food firm from private equity group Warburg Pincus, upping the holding from 17.3 per cent to 19.9 per cent at the end of March.

Nissin Foods - which invented the first instant noodles in 1958 - trades across 19 countries and has annual revenues of 3.8bn US dollars (£2.6bn).

Its products include Cup Noodles and Top Ramen.

“The challenge now for Premier management is to deliver for its shareholders the sort of value McCormick was offering,” said Investec analyst Nicola Mallard.

Premier has a stable of very well-known and profitable brands, but it has been handicapped by big debt and pension obligations following an earlier acquisition spree.

Two major shareholders had criticised Premier’s management for their handling of the situation, specifically the deal with Nissin that also saw the Japanese company become Premier’s largest shareholder after it purchased a 17.3 per cent stake from US private equity firm Warburg Pincus at 63 pence per share.

Nissin has since raised its stake to 19.9 per cent.