Premier Foods CEO open to talks with McCormick at right price; pension contribution could be too much for McCormick
Premier Foods [LON:PFD] Chief Executive Gavin Darby said he would be willing to enter into takeover negotiations with McCormick & Company, Inc. [NYSE: MKC] should it return with an offer closer to what the listed UK-based food company considers its own valuation, The Sunday Times reported. Darby said he would be willing to enter talks with McCormick or other parties despite Premier’s rejection of two previous bid approaches from Sparks, Maryland-based McCormick, if the price and conditions were right.
The report went on to cite unspecified sources who said McCormick wants to transact a takeover of Premier Foods as a “friendly” offer.
As previously reported, some of Premier Foods’ institutional shareholders have criticised the company’s board for what they perceive as favourable treatment of Japanese counterpart Nissin Food Holdings Co., Ltd, which last week acquired a 17.3% stake in Premier Foods from the private equity firm Warburg Pincus.
Darby said Nissin’s acquisition of a stake was not intended as a defence against McCormick’s bid, the item continued. However, Nissin’s stake will probably complicate any takeover discussions, the article added.
Separately, a Mail on Sunday report said contributions to Premier Foods’ pension scheme could prove too much for McCormick. Premier needs to pay GBP 185m (EUR 234m) into the scheme over the coming four years, the item said, noting that the contribution has risen from GBP 6m to over GBP 40m.
A Sunday Telegraph report cited sources close to McCormick, who argued that the Maryland-based group would be better placed financially to ensure future payments. Premier Foods cited McCormick’s offer’s “conditionality” as one reason for its rejection of McCormick’s 60p per share takeover bid. It is thought that the board was worried about McCormick fulfilling its commitments to the pension scheme, according to the newspaper.
Premier Foods’ share price stood at 52p at the close of trading in London on Friday, 25 March, giving the company a market capitalisation of GBP 429m.