Baltimore-based McCormick & Co. Inc. (MKC-V) said it’s raising its offer for the U.K.’s Premier Foods Plc (PRRFY), as consolidation among Big Food puts further pressure on the sector’s smaller players.
The new offer from the owner of Schwartz spices is 65 pence a share and values the company that bought Cadbury’s snack business and owns other traditional U.K. brands such as Mr Kipling’s cakes at 1.5 billion pounds ($2.2 billion), including debt.
It comes a week after Premier controversially spurned McCormick’s first two offers in favor of a looser cooperation agreement with Japanese snack-maker Nissin Foods Holdings (NFPDF). Nissin subsequently cemented its part of the deal by agreeing to buy a 17.27% stake in the company from private equity house Warburg Pincus. Private shareholders have voiced concerns that the board may have discriminated against McCormick in an effort to stay independent (claims that Premier tried to rebut Wednesday) .
McCormick’s new offer is a 25% improvement on the first offer of 52p, which Premier had said “significantly undervalues” its growth prospects. It is conditional, among other things, on assurances about the U.K. company’s pension deficit, and doesn’t represent a firm offer. McCormick has until April 20 to confirm its terms, under the U.K.’s Takeover Code.
Premier is only just emerging from a debt-fueled boom and bust, having divested some of the brands that it acquired before the financial crisis and raised fresh equity.
Premier had said at the time that one of its key priorities is to grow its cake business in the U.S., a goal that may be more achievable within the McCormick group, given the storied spice-seller’s existing distribution network.