The manufacturer’s response followed a report in the Sunday Times, which suggested Nissin was to buy the Batchelors brand in a deal worth £200M.
Premier said that talks between the two companies had never progressed beyond an “exploratory stage”. It had made no changes to its strategy since its preliminary results were announced in May last year, it added.
The company said it held regular reviews as part of “good corporate governance” that periodically involved discussions with third parties, including Nissin.
Discussions with third parties
“As a matter of normal good governance, the board continues to keep under review any options which could potentially add value for shareholders and other stakeholders, and accelerate the delivery of the board’s strategic objectives, particularly with respect to reducing gearing,” said Premier.
The news sparked a 2.8% rise in Premier’s shares this morning to 42.5p.
Commenting on the speculation, Martin Deboo, equity analyst at investment bank Jefferies, said the sale of Batchelors would be favourable for Premier.
“We would view any sale positively as long as the proceeds were sufficient to reduce Premier Food’s combined net debt and pension deficit leverage,” he said.
In March 2016, Nissin acquired a 17.27% shareholding in Premier, after the manufacturer rejected a hostile takeover bid from McCormick & Company. Nissin has since grown this stake to more than 20% of the business.
Hostile takeover bid
The partnership provided Premier with access to Nissin’s products and formats – expertise that directly influenced and helped the Batchelors brand.
In its half year results, released in November last year, Premier attributed 40% of the company’s growth to its partnerships with Nissin and global food giant Mondelēz International. It followed a 9.3% drop in underlying profit in its 2016/17 full-year results.
The results were a big turnaround for the company, claimed City Index market analyst Fiona Cincotta, but it was “too early to suggest Premier Foods had a new lease on life”.
Premier Foods is due to report its latest financial results tomorrow (January 16).
Meanwhile, last week, Burts Potato Chips purchased Leicester-based popcorn and healthy snacks firm Savoury & Sweet for an undisclosed sum in its first acquisition since the company was founded in 1997.