The company issued a statement following a report in the Wall Street Journal that suggested Premier was considering various options following a strategic review of its activities and its rejection of a takeover bid by US herbs and spices company McCormick & Co just over a year ago.
“Premier Foods plc notes the recent comments in the press regarding a review of options for the Group,” the company said in a statement released on June 29.
‘Regularly reviews options’
“In line with good corporate governance, the Group regularly reviews options to deliver value for all its stakeholders. These reviews are carried out in the ordinary course of business as part of the Group’s standard planning cycle and also on ad hoc bases, and may involve external advisors.”
Premier’s share price hit a two-month high of 43.5p yesterday, before falling back to 39.75p at the close of trading.
The company’s shares soared to 59.78p when McCormick tabled its offer last March. McCormick’s final takeover offer was 65p per share – more the double Premier’s average share price before the US company’s initial approach.
Following the release of the statement, Dr Clive Black, a city analyst with stockbroker Shore Capital, said: “The hiatus in Premier’s share price is curious; a well-respected journal running a story whereby the shares are marked higher only for a rebuttal to follow from the company late afternoon.
“With the statement, we have to take it as read that Premier’s account is reality. Accordingly, the spotlight of this matter is perhaps for other’s to consider.”
‘Doing a lot of things well’
Black added that Premier Foods was focused on self-improvement and “frankly doing a lot of things well with the deck of cards it has”.
“However, the business is burdened by debt and pension responsibilities that it is struggling to trade its way out of while many shareholders remain frustrated that a potential bid did not materialise,” he said.
“After a little excitement the reality may be a little more mundane. No doubt the financial authorities will be as curious about this mythical strategic review as Premier’s management.”
However, another city source was less sanguine.
“Premier Foods is not really going anywhere and has run out of ideas,” he said. “The [company’s] products are yesterday’s news and the margins are too high so [it is] open to attack. The debt levels are too high, though the current team have done a decent rescue job after the mistakes of the past. Why would anyone want to invest in this business?”
Premier will release its first quarter trading update for the year ending March 31 2018 on July 20.