Spice manufacturer McCormick has abandoned takeover talks with Premier Foods, saying the UK maker of ‘Mr Kipling’ cakes and ‘Bisto’ gravy demanded too high a price. Premier Foods shares plunged as much as 31%.
McCormick said yesterday that the price the company’s board is asking won’t benefit its own shareholders after a review of Premier’s finances.
The failed talks will put pressure on Premier chief executive Gavin Darby to deliver growth for shareholders. After spurning McCormick’s initial approaches, Premier signed a co-operation agreement with Japan’s Nissin Foods Holdings that included Nissin taking a stake in the UK company. Shareholders objected, urging Premier to begin negotiations with the US suitor.
“This is a blow for Premier Foods shareholders, but also for members of the pension scheme who would have been hoping for resolution of a decade of significant underfunding,” said Robert Lawson, co-founder at consultants Food Strategy Associates.
“The board will no doubt face questions from shareholders and trustees alike as to how they let McCormick get away.”
The last takeover proposal valued Premier at 65 pence a share in cash, or £1.5 billion pounds (€1.87bn), including debt. McCormick, a maker of spices and seasonings, had said it planned to extend the reach of Premier brands such as ‘Mr Kipling’ cakes and ‘Bisto’ gravy internationally.
Premier had surged 81% since March 22, the day before the company disclosed that McCormick had approached it about a deal. Premier said it appreciated the “open and constructive spirit” of its dealings with McCormick.
“The board sees a strong future for an independent Premier Foods,” it said in a statement. The company last month raised its sales growth forecast over the medium term to as much as 4%.