British food producer Premier Foods Plc (LON:PFD) said on Tuesday it had reached a conditional agreement to offload its sweet pickles and table sauces operations to Japan’s Mizkan Group Corp for GBP92.5m (USD148.6m/EUR114.7m) in cash, which will be deployed for debt reduction.
Upon finalisation of the transaction, which is seen to occur early next year, following green light from the vendor’s stockholders and approval from its back syndicate, Premier Foods will have raised GBP370m in proceeds from offloads since March 2012. This amount is well over the target of GBP330m by June 2014, agreed upon with its lenders under its new financing arrangements, the British company said.
The business to be shed includes the manufacturing, distribution, sales, marketing and licensing of the Branston brand, a private label operation and the Bury St Edmunds manufacturing site in Suffolk. The product range includes sweet pickle, ketchup, relish, salad cream and mayonnaise.
With the disposal, Premier Foods will be able to concentrate efforts on its grocery business and on building value in the bread line, its CEO, Michael Clarke, said. Upon close of the transaction, the branded sales mix of the grocery operations will represent some 90%.
The Branston brand is a strategic addition to Mizkan’s global range and enhances the group’s position to expand in the UK, Mizkan’s CEO, Kazuhide Matazaemon Nakano VIII, added.
UK-based food, ingredients and retail group Associated British Foods plc (LON:ABF) on Friday said it was buying the Elephant Atta ethnic flour business of Premier Foods Plc (LON:PFD) for a cash price of GBP34m (USD53m/EUR43m).
This acquisition of a top British ethnic flour brand will add to ABF unit Westmill Foods’ leading ethnic brands such as Tolly Boy rice, Rajah spices, Lucky Boat noodles and Patak’s pastes and sauces, Associated British Foods’ CEO George Weston said in a comment.
Premier Foods, which will use the cash from the sale to reduce debt, said the disposal is part of its strategy to exit selected, non-core operations and cut costs, while growing its power brands, CEO Michael Clarke said in a separate statement.
The business being sold includes the Elephant Atta, Elephant Chakki Gold and Fassal brands, mainly produced and packed at Premier Foods’ mill in Southampton.
Until regulatory clearance for the ownership transfer is obtained, Premier Foods will continue to mill and package the flour brand, the buyer said.
The Elephant Atta business generated revenues of GBP17.8m and EBITDA of GBP6.4m in the year to 31 December 2011, at which date its gross assets stood at GBP3m.
The business was founded in 1962. The Elephant Atta brand sells in a variety of medium, self-raising, white, brown and wholemeal flours used to make chapatti and other unleavened flat bread.
Westmill Foods provides ethnic food products to ethnic retailers and wholesalers in the UK.