Premier targets growth, as bid talks continue

By Michael Stones contact

- Last updated on GMT

Premier Foods
Premier Foods

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Premier Foods set out big growth plans this week, while reporting “constructive” talks with US spice manufacturer McCormick, which wants to buy the Mr Kipling manufacturer.

Premier published a ‘strategic update’ on Wednesday (April 6) – which provided more detail on the manufacturer’s six-step strategy – in a bid to push up the offer price on the company.

The document outlined how it planned deliver the six point strategy: drive sustainable growth of the medium term; supply chain excellence to create profit and loss space; outstanding execution in store; partner with customers in areas of growth; optimise trade promotional investment; and invest in people development.

‘Improved medium term outlook’

Premier said its recent partnership with instant Japanese noodle manufacturer Nissin Foods, together with other new strategic initiatives positioned the firm for growth in the UK and overseas markets, with “an improved medium-term outlook”.

It reconfirmed earlier predictions that current business momentum supported sales growth.

“New strategic initiatives to accelerate growth support raising our medium-term sales guidance from 1–2% to 2–4% – a target that the board believes is highly deliverable,”​ according to the report.

Premier expected to invest up front £2–4M in financial year 2016/2017 to support its new objectives. The plans focused on growing sales in the three key areas: Sweet Treats, Grocery and International. See box for more details.

The report’s outlook also highlighted the manufacturer’s continued focus on “trading profit and organic de-leveraging​ [reduced debt]” together with the “further upside potential from cooperation with Nissin”.

‘Constructive’ talks with McCormick

Meanwhile, Premier Foods acknowledged “constructive” ​talks with McCormick, after the US firm offered of 65p in cash per share, which Premier said was too low.

All three of McCormick’s bids for the business had significantly undervalued its business, said Premier.

The manufacturer also reported detailed discussions with McCormick and its advisers about Premier’s pension plans.

McCormick upped its bid to 65p a share at the end of last month valuing the Mr Kipling manufacturer at about £1.5bn. It had previously bid 52p a share.

The US firm stressed its revised offer was conditional upon “the prompt and full engagement”​ from Premier Foods.

Read Premier Foods Strategic Update here​.

Premier Foods’s three strategic growth aims

  1. Sweet Treats​: “Build on the successful performance of Sweet Treats over the last 18 months by investing further in our Cake on the Go offering”
  2. Grocery​: “Leverage our brands and retailer relationship to drive growth outside ambient, into chilled groceries
  3. International​:“Accelerate International roll out strategy, which is already demonstrating the potential to deliver important growth for the future

Related topics: Bakery, Cereals and bakery preparations

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