US Spice Firm Ditches Mr Kipling Maker Offer

Schwartz spice firm McCormick & Co has abandoned its £1.5bn pursuit of Britain's Premier Foods (LSE: PFD.L - news) after deciding it could not meet the asking price for gobbling up the Mr Kipling maker.

The US-based firm pulled out after three earlier proposals to Premier (NasdaqGS: PINC - news) were rejected as too low.

Shares (Berlin: DI6.BE - news) in the British company, which had doubled since news of US-based McCormick’s interest emerged last year, tumbled 25% after McCormick said it was pulling out.

Premier – whose brands also include Bisto, Homepride, Oxo and Sharwood's, will now be free to focus on accelerating its own growth plans, including one involving cooperation with Japanese noodle maker Nissin Foods.

Nissin has built up a 19.9% stake in Premier.

McCormick's takeover approaches were repeatedly rejected as undervaluing the business – though the last attempt two weeks ago had seen Premier indicate that it was "prepared for meetings to take place" to see if the offer could be improved.

The latest offer had valued Premier's shares at £537m, while including debt and future pension liabilities it represented an enterprise value of £1.5bn for the business.

Now McCormick's has said it had "concluded that it would not be able to propose a price that would be recommended by the board of Premier Foods while also delivering appropriate returns for McCormick shareholders".

"Accordingly, McCormick has withdrawn its proposal to acquire Premier Foods," the firm added.

Premier said it saw a "strong future for an independent Premier Foods".

It (Other OTC: ITGL - news) said it believed its "longer-term prospects would be enhanced by the co-operation agreement it has signed with Nissin Foods".

The agreement could see Nissin's products distributed in the UK and Premier taking advantage of the Japanese firm's international distribution network.

Nissin has also agreed not to attempt to buy Premier Foods for six months, unless another group makes a firm bid for the UK food business (Other OTC: UBGXF - news) .