Premier Foods CEO defends board’s rejection of takeover bid from McCormick; McCormick may want to keep Premier’s pension deficit off its books
Premier Foods [LON:PFD] Chief Executive Gavin Darby has defended the decision of the UK-based food company’s board to reject a takeover offer from Sparks, Maryland-based counterpart McCormick & Company [NYSE:MKC], The Daily Telegraph reported. Darby rejected suggestions that Premier’s board did not discuss McCormick’s 60p per share offer properly, the article said, noting criticism of the board by some of Premier’s institutional shareholders last week.
Darby said the chairmen of Premier Foods and McCormick had met once within the past six weeks, held four substantial conversations via telephone and had exchanged several letters and emails.
The CEO added that there remains plenty of time for a rival bidder to come forward.
Premier will try to persuade investors this week that it took the correct course, the article said. Darby will present the strategy for accelerated growth the item said. The CEO said the strategy had been a factor in convincing the Premier board that 60p per share was a significant undervaluation, according to the report.
As reported last week, the Japanese food company Nissin acquired a 17% stake in Premier Foods from the buyout group Warburg Pincus a day after Premier rejected McCormick’s offer.
McCormick has indicated that it may be prepared to increase its offer, but only if it gains access to Premier Foods’ books and information about the company’s pension liabilities, the item noted.
The article went on to cite City sources who thought that McCormick might be looking to keep liability for the Premier Foods pension scheme’s GBP 390m (EUR 496m) deficit off its books. However, UK pension law might make such a move impossible, thereby proving an obstacle to a deal, the report said.
Premier Foods’ share price stood at 52p at the close of trading on Thursday, 24 March, giving the company a market capitalisation of GBP 429m.
Daily Telegraph