Premier Foods’s board welcomed Nissin as a long-term shareholder on the basis that the Japanese instant noodle manufacturer “understands and supports Premier’s growth ambitions”.
The deal represented a key opportunity to drive the manufacturer’s growth at home and in overseas markets, said Premier chairman David Beever.
‘Supports our growth ambitions’
“By gaining a strategic investor who understands and supports our growth ambitions, we have an exceptional opportunity to deliver shareholder value,” said Beever.
“Based on the conditional cooperation agreement we announced yesterday [March 23], we very much look forward to working with Nissin to develop ways our two businesses can co-operate to drive growth.”
Dismissing the hostile takeover bid from the US spice manufacturer, Beever said yesterday: “McCormick’s Proposal represents an attempt to capture the upside value embedded in Premier’s business that rightfully belongs to Premier’s shareholders.
“The proposal fails to recognise the value of Premier’s performance to date and prospects for the future, including the strategic plans we have to accelerate growth.”
The Premier Foods boss identified three key strategic projects – spanning the divisions of Sweet Treats, Grocery and International – that would accelerate the manufacturer’s growth.
Three strategic projects
In Sweet Treats, the business planned to build on what it claimed was the successful trial of its Cake-To-Go range of Mr Kipling twin-pack slices and Cadbury mini roll twin-pack by accelerating growth of its brands in broader convenience channels.
Premier still open to offers
“Should McCormick, or any other bona fide potential offeror, come forward with an improved proposal that better reflects the board’s assessment of the company’s underlying value over the longer term, the board would give such offer careful consideration and evaluate its merits …”
- Company statement
In Grocery, Premier planned to raise its brands’ presence in premium areas within the chilled grocery sector in the sweet and savoury segments.
In International, the manufacturer highlighted the growth prospects arising from its investments in hiring an experienced team and accelerating the expansion of its cake brands in the US and elsewhere.
Premier’s partnership with Nissin will deliver five key benefits for both organisations, said Beever.
Those benefits included: offering Premier access to Nissin’s innovative products and formats to distribute in the UK market, enabling the manufacturer to benefit from Nissin’s international scale to accelerate sales in overseas markets and the sharing of Nissin’s significant intellectual property.
The final two benefits included: opportunities for both partners to exploit their joint manufacturing capabilities and infrastructure and to share expertise and best practice.
As part of the deal, Nissin has the right to appoint a non-executive director to the board of Premier, conditional upon it holding 15% of the manufacturer’s shares.
Five benefits claimed for Premier’s partnership with Nissin Foods
1. Providing Premier with access to Nissin’s innovative products and formats to distribute in the UK market under either Nissin’s or Premier’s brands, such as Batchelors
2. Enabling Premier to benefit from Nissin’s international scale to accelerate the distribution of Premier’s products in key overseas markets
3. Sharing of Nissin’s significant intellectual property, innovation and technical know-how to develop new products
4. Creating opportunities for both companies to leverage their joint manufacturing capabilities and infrastructure
5. Facilitating sharing of expertise and best practice through appropriate secondments of personnel
Source: Premier Foods