Mr. Kipling cakes-to-Bisto gravy maker Premier Foods (PFD) powers more than 45% higher to 45.75p on Wednesday amid frenzied takeover excitement. Investors are betting a bid war may ensue, the food producer having received and rejected two bids from US spices, seasoning mixes and condiments maker McCormick & Co (MKC:NYSE).
Famed for its Ambrosia rice and custard, the iconic OXO cube and leading Asian cuisine brand Sharwood's, Premier says it received an approach regarding a possible offer on 12 February pitched at 52p per share in cash which it knocked back.
An improved offer of 60p lodged on 14 March was also rebuffed by the board on the grounds it 'significantly undervalues Premier's growth prospects and represents an insuffient premium to Premier's enterprise value', though long-suffering shareholders will no doubt be tempted by the latter offer's 90.5% premium to yesterday's 31.5p closing price.
McCormick & Co, whose brands include the eponymous McCormick as well as Lawry's and Club House, now has until April 20 to make a firm offer under the UK Takeover Code, though St. Albans-based Premier sees a strong future as an independent.
Mounting a bid defence, the £259.4 million cap highlights 'a strong and valuable portfolio of market leading brands, extensive distribution across key retail channels, a well-invested manufacturing base and strong operational cash flows. Under the strong leadership of CEO, Gavin Darby, Premier has assembled a highly experienced management team that has successfully restructured the business and put in place an investment-led growth strategy that is already starting to deliver results.'
Premier also raises its medium-term sales growth guidance from 1.2% to 2.4%, having apparently identified new strategic initiatives to accelerate growth across its grocery, sweet treats and international businesses. Progress has been made under Darby's stewardship, though top line growth remains tough to generate in the midst of a fierce price war among supermarket customers.
Highlighting its ambitions as a stand-alone business, Premier has today flagged an intriguing cooperation agreement with Japan's Nissin Foods (2897:T), a global leader in instant noodles whose brands include Cup Noodles, Top Ramen and Soba.
The strategic tie-up may see Premier distributing Nissin's products in the UK, enable Premier to use Nissin's scale to speed up product distribution in overseas markets and share the Tokyo-listed giant's intellectual property and technical know-how to develop new products.