Premier Foods has played down media reports that it is close to a deal to sell its Batchelors' brand to Nissin Foods.
In a statement the company repeated what is said back in June 2017, that, in line with good corporate governance, it regularly reviews options to deliver value for all its stakeholders.
“Such reviews do periodically involve discussions with third parties, including Nissin (with whom the company signed a Co-operation Agreement in March 2016). There is no current situation where discussions have gone beyond an exploratory stage.”
The board also stated that it would always review any option that accelerated the “delivery of the Board's strategic objectives, particularly with respect to reducing gearing.”
Focus on debt reduction
The Board said it remained focussed on its strategic objectives, including that of reducing the ratio of net debt to EBITDA below three times.
In ‘business speak’ the latest statement indicates that talks have taken place (and may even be ongoing) but that no deal is imminent.
In recent years, Premier has attempted to reduce its debt burden via disposals, reducing capital expenditure and taking pension contribution holidays. However, despite these efforts debt ratios are now seen as uncomfortably high.
Premier Foods has attracted interest from potential suitors in recent times. The company rejected a bid approach from US spices and herbs maker McCormick in 2016.
Back then, the unsolicited 52p-a-share offer was for whole business, not the Batchelors brand.
The bid was rejected on the basis that it substantially undervalued the company and its prospects.