US food ingredient group McCormick & Co (NYSE:MKC) has dropped its takeover interest in Mr Kipling cake maker Premier Foods (LON:PFD).
McCormick said it had completed its due diligence review of Premier Foods, which was conducted with Premier's management in an open and collaborative spirit.
But it added in a statement: "McCormick has, after careful consideration, concluded that it would not be able to propose a price that would be recommended by the board of Premier Foods while also providing appropriate returns for McCormick shareholders.
"Accordingly, McCormick has withdrawn its proposal to acquire Premier Foods."
Premier said in a statement following McCormick's announcement: "The board sees a strong future for an independent Premier Foods, and believes that the foundations have been laid for significant growth."
McCormick increased a takeover bid for Premier at the end of March after the latter rejected two previous tentative offers.
It upped a previous 60p per share tentative offer for Premier to 65p per share, valuing the company at £537.3mln.
After rejecting the two previous offers, Premier instead agreed a “co-operation” deal with Japanese noodle maker Nissin, which has taken a 17.27pc stake in the group at 63p per share.
Premier subsequently agreed to co-operate with McCormick on due diligence after receiving its latest improved approach.
Shares in Premier crashed 17p, or nearly 30%, following McCormick's statement.
Premier added in its statement: "The board also considers that the company's longer-term prospects will be enhanced by the co-operation agreement it has signed with Nissin Foods Holdings Co., Ltd., which will expand Premier Foods' range of growth opportunities."