Premier Foods pressed to open its books

Premier chief executive Gavin Darby holding out
Premier chief executive Gavin Darby holding out
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Premier Foods will come under pressure this week from institutional shareholders to allow its US suitor to do due diligence on its books to pave the way for a possible higher takeover offer proposal.

The Mr Kipling and Bisto maker was rapped last week by Edinburgh-based fund manager Standard Life Investments (SLI), which holds 7 per cent of Premier Foods, over its handling of the 60p-a-share takeover proposal from American spices group McCormick.

Premier snubbed the £495 million offer, only for Nissin Foods of Japan to snap up a 17 per cent stake in the British company at 63p a share 24 hours later from private equity investor Warburg Pincus – a development welcomed by Premier chief executive Gavin Darby.

David Cumming, head of equities at SLI, said Premier’s stance regarding Nissin did “not reflect well… on the board’s objectivity” and urged further talks with McCormick in the hope of attracting a higher bid.

One institutional shareholder said yesterday: “Nissin’s stakebuilding at the higher price shows McCormick’s initial approach was a low-ball pitch. But there is a very decent likelihood that McCormick would increase it if it was allowed access to Premier’s books.” Of particular interest to Premier and its suitor is how the latter would address the British group’s £300m pension deficit.

However, it is understood that so far Premier has held out for a better offer proposal on the table before opening its books to due diligence as part of negotiations.