US spice brand McCormick has upped its offer on Premier Foods to 65p a share.
This is the third offer the company has made for Premier, following unsolicited offers at 52p on 12 February, and 60p on 14 March.
In a statement, McCormick urged Premier to now “fully engage” with it to agree a recommended offer, and said its offer valued the company at an enterprise value of £1.5bn.
A spokesman for Premier Foods told British Baker the board needed to consider the offer before making a statement and added that any comment on how a deal with McCormick might affect Premier’s proposed cooperation agreement with Nissin would be speculation.
She said: “I think it is a bit early to talk and the board needs time to consider.”
In a statement, the company said: “McCormick believes this revised offer should be well received by Premier Foods’ shareholders, employees, pensioners, creditors, and other stakeholders.
“McCormick continues to believe 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, with or without the proposed co-operation with Nissin Foods.”
Premier Foods’ share price jumped this morning in the wake of the announcement, climbing to 60.50p per share at 9.34am from 56.50p at 4.30pm yesterday.
It has also emerged that Japanese instant noodle firm Nissin yesterday upped its stake in Premier Foods from 17.27% to 19.90% after buying a further 21.7 million shares.
Hossam Zeitoun, assistant professor of strategy and international business at Warwick Business School, said: "It is a puzzle why McCormick didn’t buy the 17.3% stake that ultimately went to Nissin. Possibly, McCormick wants to ensure due diligence before making a bigger investment. McCormick’s new offer makes it more likely that Premier Foods will open its books. This would enable McCormick to make a careful assessment, which might result in an even higher offer for Premier Foods’ shares."
He added: "Nissin bought its stake at 63p per share and could potentially resell its stake at a small profit. However, Nissin has more long-term objectives and is likely to be reluctant to resell its stake. Nissin’s stake remains an obstacle for McCormick, which is seeking full control of Premier Foods."