The bosses of Premier Foods have defended their decision to block a takeover bid by McCormick, despite anger from shareholders.
Last week the American spice and herb manufacturer McCormick offered 60p a share for Premier Foods, the manufacturer of brands such as Mr Kipling and Bisto, only to have the offer unanimously turned down by the Premier board.
This was taken poorly by some of the company’s major shareholders. The day following the refusal, Warburg Pincus sold its 17% stake in Premier to Japanese noodle manufacturers Nissin, leading some to claim the company had acted in the interested of one major shareholder to the detriment of the rest.
“The Premier board feels very confident that rejecting 60p was a good decision,” said Chief Executive of Premier Foods Gavin Darby. “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.”
McCormick has said that it would only be interested in full ownership of the company. Though Darby said there is an “awful lot of time” and a strong possibility that a rival bidder will emerge, McCormick indicated that it would need to investigate Premier’s £390m pension deficit before increasing its offer.
“It’s now a marketplace and McCormick have the opportunity to buy, some would say, 83% of Premier shares and others would say 100%,” Darby continued.
Answering McCormick’s criticism that the offer had not been properly discussed, Darby insisted that the board had met “once in the last five and a half weeks”, had had “four very significant telephone conversations” and had exchanged “emails and letters”.
Part of the rejection of McCormick’s bid was Darby’s own insistence that his accelerated growth plan would see company sales increase 4% over the next few years. According to the The Telegraph, this plan involves moving brands from tinned to refrigerated aisles at supermarkets, international expansion, which Darby has said will now be bolstered by the company’s new relationship with Nissin, and increased impulse purchases of Premier Foods confectionary at store tils.