McCormick loses its appetite for UK's Premier Foods
By Martinne Geller
LONDON (Reuters) - Shares in Premier Foods (PFD.L: Quote) sank 27 percent on Wednesday after U.S. spice maker McCormick Foods (MKC.N: Quote) dropped its 1.5 billion pound ($2.1 billion) takeover proposal for the UK maker of brands including Mr Kipling cakes.
McCormick, known for its own name spices and those under the Lawry's and Schwartz brands, said it would be unable to make a proposal that would both be recommended by Premier Foods' board and deliver sufficient returns for its own shareholders.
"Accordingly, McCormick has withdrawn its proposal to acquire Premier Foods," it said in a statement.
The move sent shares in Premier, which had nearly doubled from 31.50 pence a share when McCormick's interest was revealed last month, as low as 39.25 pence. They closed down 27 percent at 41.75 pence.
Premier's second-largest shareholder, hedge fund Paulson & Co, criticised the food company's board for rejecting McCormick's proposal to buy the shares at 65 pence each, up from an initial proposal of 52 pence and a second of 60 pence.
"Extremely disappointing that the board could not recommend an offer at a 106 percent premium to the pre-announcement price," a spokesman for the fund told Reuters.
Paulson and another top 5 shareholder, Standard Life Investments (SL.L: Quote), slammed Premier's board last month for its outright rejection of McCormick's earlier advances.
They also criticised a separate deal Premier struck with Japanese noodle maker Nissin Foods (2897.T: Quote), which allowed private equity firm Warburg Pincus to cash out of the UK company at a premium not offered to anyone else. Continued...