Premier Foods under fire for takeover rejection

29 March, 2016

Gavin Darby, chief executive at Premier Foods

Premier Foods has been criticised by shareholders for its handling of a takeover offer from US spice brand, McCormick.

Last week, the Mr Kipling owner announced it had rejected an offer from McCormick which valued the company at 60p a share. At the same time, it announced Japanese instant noodle brand Nissin had committed to buy a 17.27% stake in Premier as the two companies sought to form a formal relationship agreement.

However, The Guardian has reported that two large shareholders in Premier Foods, Standard Life and Paulson & Co, which own more than a 14% stake between them, have urged the company to engage in talks with McCormick or other bidders.

David Cumming, head of equities at Standard Life Investments, said: “We note with some dismay the timing of Nissin’s acquisition of a stake in Premier Foods. In our view, this does not reflect well on the Premier Foods board’s objectivity and commitment regarding its engagement with McCormick and, consequently, its desire to pursue maximum value for shareholders.

“Although we believe the 60p bid indicated by McCormick is too low, we remain open to a bid at a higher level. We expect the Premier Foods board, on behalf of its shareholders, to engage with McCormick and pursue this option to the full.”


McCormick, too, issued a statement, expressing disappointment at Premier’s handling of the incident, saying: “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 notes recent media comments and wishes to clarify that there has only been one face-to-face meeting with Premier Foods’ chairman, David Beever, on 12 February 2016. There has been no dialogue at any stage with any other members of the management team or with Premier Foods’ advisers, who had not been identified to McCormick until Premier Foods’ announcement on 23 March 2016.”

However, Premier’s chief executive Gavin Darby defended the company’s decision to The Telegraph and indicated that it was still open to offers from either McCormick or another company.

He said: “The Premier board feels very confident that rejecting 60p was a good decision. Warburg Pincus took the opportunity of selling their shares and chose to sell their shares to Nissin. Just as much as it could have been a deal between Warburg Pincus and McCormick. I’m sure all three of them were involved.

“They’ve [McCormick] got to put on the table an indicative offer that’s more in line with what the board sees as the value and they’ve also got to be more clear on what any conditions are. The ball has to be in McCormick’s court.”

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