Premier, Fending Off McCormick, Says Nissin to Take Stakeby
Japanese noodle maker to buy 17% of shares, get board seat
Buyout firm Warburg Pincus, holder of 17% stake, confirms sale
Premier Foods Plc said Japanese instant noodle purveyor Nissin Foods Holding Co. agreed to buy a 17 percent stake as the British owner of Mr. Kipling cakes seeks to fend off an unsolicited takeover approach from U.S. spice processor McCormick & Co.
Nissin, the maker of Top Ramen, is buying the shares from Premier’s biggest stockholder, private-equity firm Warburg Pincus LLC, according to a regulatory statement. The Japanese company will have the right to nominate one director to Premier’s board, the U.K. company said in a statement Thursday.
Standard Life Investments, Premier’s second-biggest holder, said it was dismayed at Nissin’s purchase and pressed the U.K. company’s board to negotiate with McCormick. Premier shares erased a 14 percent decline after the U.S. suitor said it’s willing to consider a higher offer and Premier said it would give one a careful review.
Buying the stake would cement a new relationship between Premier and Nissin, which said Wednesday they’re working on an accord to share brands and know-how. Standing between them is McCormick, which last week sweetened its offer to 60 pence a share in cash, valuing the U.K. company at about 495 million pounds ($699 million). Premier said Thursday its agreement with Nissin is contingent upon it no longer being subject to any takeover approaches.
Premier, the maker of OXO stock cubes and Bisto gravy, has rejected McCormick’s advance, saying it significantly undervalues Premier’s growth prospects. The U.S. company has until April 20 to indicate that it’s making a formal offer or walk away.
“With McCormick management giving no sign that it is looking to walk away, or that it would require management approval to proceed, we see the potential for the group to turn hostile in its pursuit of Premier, while also noting that Nissin is also sitting on the sideline as a potential suitor,” Shore Capital analyst Darren Shirley said in a note.
Premier shares rose 1.4 percent to 54.50 pence at 3 p.m. in London, having surged Wednesday after the company disclosed McCormick’s approach. Warburg Pincus sold its stake for 63 pence a share.
“McCormick is disappointed that the board of Premier Foods is conducting itself in a way that denies Premier Foods’ shareholders the opportunity to consider McCormick’s highly attractive cash offer,” the Sparks, Maryland-based company said in a statement Thursday.
Standard Life said it agreed that McCormick’s 60-pence proposal is too low, but the timing of Nissin’s acquisition “does not reflect well on the Premier Foods board’s objectivity” and its desire to seek maximum value for shareholders.