Shares in Premier Foods, the maker of Mr Kipling cakes and Oxo stock cubes, fell sharply after US spice company McCormick announced it would not proceed with a takeover bid. The stock dropped 30% in early trading, wiping out gains made since the approach was revealed three weeks ago.
McCormick said it had completed due diligence but concluded it could not offer a price acceptable to Premier's board while delivering adequate returns for its own shareholders. The US firm had initially offered 52p per share in February, later raising it to 65p on 30 March, but both were rejected.
Premier Foods responded by expressing confidence in its independent future, highlighting a cooperation agreement with Japanese noodle maker Nissin Foods. Nissin recently agreed to buy a 17.27% stake in Premier and will take a board seat, with plans to distribute Nissin products in the UK and expand Premier's overseas reach.
The company, once heavily indebted after rapid expansion, has since sold its Hovis bread business, upgraded its Barnsley bakery, and completed a £1.1bn refinancing. Despite the setback, Premier's board believes the Nissin partnership will enhance long-term prospects.
