McCormick “disappointed” by Premier Foods' board but moots higher bid

US food giant McCormick has released a statement criticising the Premier Foods (PFD) board for denying shareholders the “opportunity to consider McCormick’s highly attractive cash offer”.

Premier Foods announced yesterday it had turned down two approaches from McCormick, the first worth 52p per share and a higher 60p per share bid.

Today Premier announced that its co-operation with Japan’s Nissin Foods has been strengthen by Nissin buying a 17.27% stake in Premier from Warburg Pincus, Premier’s biggest shareholder, at 63p per share.

McCormick said it was “disappointed” in the way the Premier Foods board was conducting itself, but is willing to consider upping its offer again.

The statement read: “Despite McCormick’s efforts to enter into a meaningful dialogue with Premier Foods on several occasions, the board of Premier Foods has been unwilling to engage constructively with McCormick.”

McCormick said it has only had one face-to-face meeting with Premier’s chairman David Beever (on 12 February 2016).

“McCormick is willing to proceed with limited confirmatory due diligence that comprises only: a review of material pensions documentation, current trading and material contracts.

“McCormick believes that its offer is highly deliverable due to its limited pre-conditions.”

The Grocer understands that the McCormick bid contains pre-conditions specifically related to Premier Foods’ pension deficit that could prove a further stumbling block to any deal.

McCormick’s said its 60p per share proposal values Premier Foods at an enterprise value of approximately £1.5bn and gives an implied exit multiple of 10.3x pro forma 2015 EBITDA.

McCormick said it is willing to consider increasing its latest offer “if justified following its confirmatory due diligence”.

“McCormick believes that, with its 127 year heritage, it would be an outstanding custodian for the Premier Foods brands, and, with the strength of its balance sheet, can provide benefits for Premier Foods, its pensioners, creditors and other stakeholders, which Premier Foods’ current capital structure cannot deliver.”

McCormick ends its statement urging Premier Foods’ shareholders to encourage the board of Premier Foods to engage fully with the approach – suggesting McCormick is open to going hostile and putting the offer straight to shareholders.