McCormick Hits 52-Week High on Premier Foods Potential Bid
Shares of McCormick & Co., Inc. MKC reached a 52-week high of $96.46 on Mar 24, 2016 and eventually closed at $96.33, possibly on the company’s takeover offer for British food manufacture Premier Foods PLC.
Factors at Play
On Mar 23, the U.S.-based spice maker McCormick confirmed that it had has made a takeover approach for Premier Foods PLC. In fact, McCormick stated that it had approached Premier Foods twice, first in February and then again in March, but the latter rejected the offer and instead joined forces with Japan’s Nissin Foods Holdings Co., which has now become Premier's largest shareholder. Premier Foods said McCormick's possible cash offers of 52 pence a share in February and 60 pence a share represented an insufficient premium to its enterprise value.
McCormick, known for its spices and Lawry's seasonings, expressed its disappointment that despite several efforts to "enter into a meaningful dialogue" with Premier, the company is unable to engage constructively, as it could have only one face-to-face meeting with Premier's chairman on Feb 12.
McCormick now plans to make a firm offer for Premier under British takeover rules by Apr 20. McCormick is willing to proceed with limited confirmatory due diligence that only comprises a review of pensions documentation, current trading and material contracts; and is willing to consider raising its latest offer if justified.
McCormick expects to gain from Premier Foods’ range of mainstream grocery brands that are slow-growing but profitable.
McCormick has a Zacks Rank #3 (Hold).
Better-ranked players in the food industry include Campbell Soup Company CPB, Post Holdings, Inc. POST and Sysco Corp. SYY. While Campbell Soup and Post Holdings sport a Zacks Rank #1 (Strong Buy), Sysco holds a Zacks Rank #2 (Buy).
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