Shares in the maker of Mr Kipling cakes have plunged after US company McCormick abandoned a proposed takeover.
The US maker of Schwartz dried spices and sauces said after inspecting Premier Food’s books it could not offer a price acceptable to Premier.
Premier’s share price dropped 30% to 40p in early trading after the announcement to the stock market on Wednesday morning.
McCormick made three approaches to buy Premier for cash – of 52p, 60p and 65p a share – but was turned down each time.
After the third approach Premier, which also makes Bisto gravy and Ambrosia custard, said it was prepared to talk to McCormick about an increased offer. Standard Life and Paulson & Co, two of Premier’s biggest shareholders, criticised the company over its handling of McCormick’s approach and urged it to talk to the US company.
Premier’s shares have risen 80% since it announced McCormick’s interest and closed on Tuesday at 57p. The failure of the talks will disappoint investors who had bet on McCormick’s approach proving successful.
McCormick said: “McCormick has, after careful consideration, concluded that it would not be able to propose a price that would be recommended by the board of Premier Foods while also delivering appropriate returns for McCormick shareholders. Accordingly, McCormick has withdrawn its proposal to acquire Premier Foods.”
Both companies said the talks were conducted in an open and constructive spirit. Premier said it had a strong independent future.
