UK-based food manufacturer Premier Foods has rejected a bid offer worth a £495m from US-based food giant McCormick.
The company has rejected the offer saying that the offer from McCormick significantly undervalued Premier Foods and its prospects.
Following the rejection of the first offer made by McCormick which offered an indicative price of 52 pence per Premier share, Premier Foods received a revised possible offer for the entire issued, and to be issued, ordinary share capital of the company at 60 pence in cash for every share of Premier Foods.
The company also rejected the second offer citing undervaluation of Premier Foods and its future prospects.
Premier Foods chairman David Beever said: "McCormick's Proposal represents an attempt to capture the upside value embedded in Premier's business that rightfully belongs to Premier's shareholders.
"The Proposal fails to recognise the value of Premier's performance to date and prospects for the future, including the strategic plans we have to accelerate growth.
"McCormick's Proposal significantly undervalues the business and the Board has unanimously decided to reject it."
The food company is planning new initiatives to build on its existing platforms, infrastructure and brand presence to expand into new formats, channels and markets. It intends to accelerate growth in three business units - grocery, sweet treats and international.
In sweet treats unit, Premier Foods plans to pilot Cake-To-Go range of Mr. Kipling twin pack slices and Cadbury mini roll twin pack to achieve growth in broader convenience channels.
In grocery segment, the company plans to extend performing brands into premium areas within the chilled grocery sector in the sweet and savoury segments, including product ranges to meet consumers' growing health-consciousness.
In International arena, Premier Foods plans to leverage the investment already made in hiring an experienced team to step-change the size of our international business.
The company will also focus on accelerating the expansion of its cake brands in the US and other geographies using differentiated offering, unique formats and packaging. It has also initiated store trials to check the potential for future growth in these markets.
Instead, Premier Foods is seeking to engage with Japanese food company Nissin Foods under a cooperation agreement.
Under the agreement, Premier Foods would gain access to Nissin's products for distribution in the UK, while also leveraging the international distribution for Premier Foods' products such as Ambrosia custard and Bisto gravy.
The agreement with Nissin will also enable Premier Foods to share Nissin's significant intellectual property, innovation and technical know-how to develop new products.
Together, the companies plan to create opportunities in order to leverage their joint manufacturing capabilities and infrastructure.
Gavin Darby said: "This is an exceptional opportunity for us to gain a major strategic partner which understands our business and supports our growth ambitions. We look forward to working with Nissin to explore ways our two businesses can co-operate to better serve both our customers and our shareholders."
Image: Premier Foods rejects McCormick approach. Photo: Courtesy of savit keawtavee/FreeDigitalPhotos.net.495
