Premier Foods has entered into a "relationship" with Japanese instant noodle manufacturer, Nissin Foods. The "cooperation agreement" – or relationship as termed by the companies – follows the March deal between Nissin and private equity firm Warburg Pincus, in which the former acquired the latter's 17.27% stake in Premier Foods.
Post the deal, Nissin's shareholding in Premier Foods – the maker of Mr Kipling cakes and Bisto gravy – has increased to 19.9%.
Under the new agreement, Nissin, which is a substantial shareholder in the British company, will have the right to appoint a non-executive director to Premier's board. However, this right will be allowed "for so long as Nissin holds an interest in shares representing 15% or more of the ordinary issued share capital of Premier".
The new relationship between follows the British company rejecting a takeover bid by McCormick, the American company that manufactures spices, herbs and flavorings for retail, commercial, and industrial markets. McCormick had first approached Premier Foods in February with a takeover bid of 52p (€0.64, $0.72) per share. It later increased the offer to 60p per share on 14 March.
However, Premier rejected the offer. It argued that McCormick's final offer, which valued it at £1.5bn, "substantially undervalued the company and its prospects". The British company instead signed a cooperation deal with Nissin in March. As per this deal, both companies will share arrangements across the products, distribution and manufacturing side of business including noodle-making technology and branding.
David Beever, chairman of Premier had then said, "We welcome Nissin as a new long-term shareholder in our business. By gaining a strategic investor who understands and supports our growth ambitions, we have an exceptional opportunity to deliver shareholder value."