Daily Management Review

McCormick Offers A Revised Rate For Premier Foods’ Takeover


04/05/2016


McCormick raises 5p per share for taking over Premier Foods.



McCormick is the “spice giant” of the United States, which was planning on taking over the Premier Foods at “60p” per share. However, keeping the value of “Mr Kipling to Oxo Cubes group at £1.5bn”, the former has raised the rate at “65p per share”.
 
According to McCormick, the company’s offer to Premier Food has been on a condition, whereby the former will be allowed to conduct a review of Premier’s material contracts, current trading and pension related documents.
 
On the other hand, Premier also provided information of its denial to McCormick when the latter had made offers of “52p and 60p” per share for Premier felt that the said deal was “significantly” undervaluing “its potential”. Nevertheless, McCormick commands a certain presence in the United Kingdom through its “Schwartz brand”, whereby it has “again” summoned its UK board in an attempt to "engage fully with McCormick to agree a recommended offer, which will offer all shareholders the opportunity of a cash exit at a full valuation of the company".
 
Likewise, the major shareholders of McCormick, Paulson and Standard Life have urged McCormick to engage itself into “talks” with Premier Foods. Yet, the matter seems to get complicated with Premier’s “17.3% stake” which has been taken by Nissin, a giant noodle company of Japan. Nissin acquired the said share from “long-term shareholder” of Premier Foods “Warburg Pincus”. In words of the chairman, David Beever, the said move is a "strategic investor who understands and supports our growth ambitions".
 
Paulson, a seven percent shareholder of Premier Foods told Beever that the company should engage entirely with McCormick besides “proactively” soliciting “other offers”.  Moreover, it also added that Warburg’s action of selling “all their shares at 63p” "shows that the 60p offer from McCormick should be worthy of engagement".
 
While, an analyst, Darren Shirley wrote:
"We see 65p as a good compromise price, allowing Premier’s management to highlight the extra value it has extracted from McCormick, whilst also offering shareholder’s the opportunity of a cash exit today at a reasonably full EBITDA valuation rather than waiting for the chance of a higher price through operational improvement highlighted by the company in its statement to the market last week, which is not without risk”.






References:
http://www.digitallook.com/
 







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