McCormick & Company Confirms Possible Offer for Premier Foods plc
Flavor company McCormick & Company confirms it has approached the Board of Premier Foods plc regarding a possible all cash offer for Premier Foods plc of 60 pence per Premier Foods share.
An acquisition of Premier Foods, one of the leading branded food companies in the United Kingdom, would be consistent with McCormick's long-term strategy and has the potential to create value for McCormick shareholders. Premier Foods offers seasonings, gravy and stock cubes, cooking and pasta sauces, dessert mixes and sweet treats under brand names including Oxo, Bisto, Sharwood's and Mr. Kipling's. Strategic considerations for such an acquisition would include the following:
-Add a portfolio of iconic, household-name brands which complement McCormick's product range and expertise;
-Increase significantly McCormick's presence in a large grocery retail market;
-Leverage McCormick's innovation and marketing capabilities and strong balance sheet to improve on the execution of Premier Foods' strategy;
-Grow Premier Foods' presence in international markets through McCormick's global scale; and
-Realize synergies to enable further investment in Premier Foods' iconic British brands to drive growth.
On February 12, 2016, McCormick made a detailed proposal to acquire the entire issued share capital of Premier Foods for 52 pence per Premier Foods share. This proposal was rejected by the Board of Premier Foods. On March 14, 2016, McCormick made a revised proposal for a possible all cash offer of 60 pence per Premier Foods share. The Revised Proposal was made on the basis that it would lead to prompt and full engagement from Premier Foods, including access to limited confirmatory due diligence, to agree to a transaction on a recommended basis. The Revised Proposal was rejected by Premier Foods yesterday, March 22, 2016.
The Revised Proposal reflects a substantial premium to all relevant recent Premier Foods share price metrics, in particular a premium of:
90 percent to the pre-announcement Premier Foods share price of 31.5 pence; and 55 percent to the 12 month volume weighted average Premier Foods share price of 38.6 pence for the 12 month period ending March 22, 2016.
In addition, the implied exit multiple of 10.3x pro forma 2015 EBITDA compares favorably with recent significant UK food transactions.
McCormick believes that an all cash offer at this level should be well received by Premier Foods' shareholders, employees, pensioners and other stakeholders, and would provide Premier Foods' shareholders with an attractive premium combined with the certainty of cash value now.
McCormick has a 30 year track record in the UK across the food industry, through its Schwartz brand in retail and foodservice and through its business to business relationships with quick service restaurants and other consumer food companies. McCormick's management team has a track record of successfully executing acquisition opportunities in adjacent categories in developed and emerging markets, and increasing the performance of the brands that it acquires. The Board of McCormick expects that an acquisition of Premier Foods would be consistent with McCormick's long term strategy. Any transaction would be financed from McCormick's existing resources and new debt facilities.
An acquisition of Premier Foods, one of the leading branded food companies in the United Kingdom, would be consistent with McCormick's long-term strategy and has the potential to create value for McCormick shareholders. Premier Foods offers seasonings, gravy and stock cubes, cooking and pasta sauces, dessert mixes and sweet treats under brand names including Oxo, Bisto, Sharwood's and Mr. Kipling's. Strategic considerations for such an acquisition would include the following:
-Add a portfolio of iconic, household-name brands which complement McCormick's product range and expertise;
-Increase significantly McCormick's presence in a large grocery retail market;
-Leverage McCormick's innovation and marketing capabilities and strong balance sheet to improve on the execution of Premier Foods' strategy;
-Grow Premier Foods' presence in international markets through McCormick's global scale; and
-Realize synergies to enable further investment in Premier Foods' iconic British brands to drive growth.
On February 12, 2016, McCormick made a detailed proposal to acquire the entire issued share capital of Premier Foods for 52 pence per Premier Foods share. This proposal was rejected by the Board of Premier Foods. On March 14, 2016, McCormick made a revised proposal for a possible all cash offer of 60 pence per Premier Foods share. The Revised Proposal was made on the basis that it would lead to prompt and full engagement from Premier Foods, including access to limited confirmatory due diligence, to agree to a transaction on a recommended basis. The Revised Proposal was rejected by Premier Foods yesterday, March 22, 2016.
The Revised Proposal reflects a substantial premium to all relevant recent Premier Foods share price metrics, in particular a premium of:
90 percent to the pre-announcement Premier Foods share price of 31.5 pence; and 55 percent to the 12 month volume weighted average Premier Foods share price of 38.6 pence for the 12 month period ending March 22, 2016.
In addition, the implied exit multiple of 10.3x pro forma 2015 EBITDA compares favorably with recent significant UK food transactions.
McCormick believes that an all cash offer at this level should be well received by Premier Foods' shareholders, employees, pensioners and other stakeholders, and would provide Premier Foods' shareholders with an attractive premium combined with the certainty of cash value now.
McCormick has a 30 year track record in the UK across the food industry, through its Schwartz brand in retail and foodservice and through its business to business relationships with quick service restaurants and other consumer food companies. McCormick's management team has a track record of successfully executing acquisition opportunities in adjacent categories in developed and emerging markets, and increasing the performance of the brands that it acquires. The Board of McCormick expects that an acquisition of Premier Foods would be consistent with McCormick's long term strategy. Any transaction would be financed from McCormick's existing resources and new debt facilities.