(MENAFN- ProactiveInvestors - UK) Mr Kipling cake maker Premier Foods PLC (LON:PFD) has received an improved takeover approach from US spice maker McCormick & Co (NYSE:MKC).
McCormick has upped its previous 60p per share tentative offer for Premier to 65p per share valuing the company at 537.3mln.
The news is likely to spark hopes of a takeover battle for Premier which also makes products such as Sharwood's curry sauces Bisto gravy and Ambrosia custard and rice.
Premier has already rejected two tentative offers from McCormick and instead agreed a 'co-operation' deal with Japanese noodle maker Nissin which has taken a 17.27pc stake at 63p per share.
But analysts predicted on Tuesday that McCormick which initially offered 52p a share would raise its subsequent 60p a share bid by 5p.
In a statement McCormick urged Premier's board to "engage fully" with it to agree a recommended offer which it said would offer all shareholders the opportunity of a cash exit at a full valuation.
It said: "McCormick believes that this revised offer should be well received by Premier Foods' shareholders employees pensioners creditors and other stakeholders.
"McCormick continues to believe that with its 127-year heritage it would be an outstanding custodian for the Premier Foods brands and with the strength of its balance sheet can provide benefits for Premier Foods its pensioners creditors and other stakeholders which Premier Foods' current capital structure cannot deliver with or without the proposed co-operation with Nissin Foods."
Premier will now face pressure to open its books to McCormick which has made the latest offer conditional on gaining access to Premier'spension documentation current trading and material contracts.
Some Premier shareholders have already said it should talk to the US group which must announce a firm intention to bid or walk away by a 'put-up-or-shut-up' deadline of April 20.
Broker Liberum Capital said Premier's net debt which stood at 585.3million in November and its 'large' pension liability of 4.2billion were weighing on its share price and limiting opportunities.
'In our view Premier is better off as part of a larger group' the broker said in a note.
Shore Capital said it believed 65p was a good compromise price allowing Premier's management to highlight the extra value it has extracted from McCormick.
"Accordingly we suggest stakeholder's should accept the 65p offer noting the involvement of Nissin as a minority shareholder (17%) though with the current share price now implying <10% upside we move recommendation to 'hold' from 'buy'" the broker said.
Shares in Premier rose 4.25p or 7.5% to 60.75p in early London trading.
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