Japan’s Nissin to take Warburg’s slice of Premier Foods: Reuters

(Reuters) — Instant noodle maker Nissin Foods (2897.T) has agreed to buy a 17.27 percent stake in Premier Foods (PFD.L) from U.S. private equity firm Warburg Pincus [WP.UL], the Japanese company said on Thursday.

Premier Foods said on Wednesday it had rejected a second takeover approach from U.S. peer McCormick & Co (MKC.N). Premier, the maker of Mr. Kipling cakes and Bisto gravy, said an equity price tag of roughly $700 million undervalued it.

Following an initial approach in February and a second one in March at a proposed price of 60 pence per share, McCormick now has until April 20 to make a firm offer for Premier.

Having rejected McCormick’s approaches, Premier agreed instead to a cooperation deal with Nissin.

“By gaining a strategic investor who understands and supports our growth ambitions, we have an exceptional opportunity to deliver shareholder value,” Premier Chairman David Beever said in a statement.

The companies are seeking to finalize the terms of a relationship agreement that is conditional on Premier no longer being in an offer period. That agreement also allows for the companies to collaborate on sales and innovation.

Premier shares were down more than 10 percent at 48 pence on Thursday at 1105 GMT, paring some of Wednesday’s gains that saw them soar 70 percent.

Warburg invested in Premier in 2009 and is its largest shareholder, according to Reuters data, with a 17.27 percent stake. Warburg has more than $40 billion in assets under management and an active portfolio of more than 120 companies.