Premier Foods to Sell Canned Grocery Operation to Princes For £182m
Premier Foods has agreed to sell its East Anglian canned grocery operations to Princes for £182m. The sale is in line with Premier’s strategy of reducing debt and follows the proposed disposal of its meat-free business.
The canned operations are part of the Premier’s grocery division and have two manufacturing sites in the UK at Long Sutton, in Lincolnshire, and Wisbech, in Cambridgeshire. The business being sold employs approximately 1,600 people and manufactures a wide range of canned foods including baked beans, pasta, vegetables, soup, meat and fruit.
Included in the sale are the Crosse & Blackwell, Farrows, Fray Bentos and Smedley’s brands and certain other minor brands which are used on canned products. Premier has agreed a long-term licence with Princes to enable it to use the Branston brand on baked beans and pasta in cans and the Batchelors brand on vegetables, wet soups and pasta in cans, and a short-term licence to use Hartley’s on canned fruit. The sale excludes Premier’s Ambrosia branded canned desserts operations in Lifton, Devon, which are being retained.
Robert Schofield, chief executive of Premier Foods.
For the year ended 31st December 2010, the disposed business is expected to have revenues of £334.2m, EBITDA of £31.7m and a trading profit of £27.8m. As at 31st December 2010, the gross and net assets being sold were £167.1m. The purchase price represents a multiple of 5.75 times EBITDA.
The sale will reduce Premier’s average debt/EBITDA ratios by around 0.2x, making a further contribution toward reaching the target leverage ratio of below 3.25x.
“We are pleased to have reached an agreement to sell our canned grocery operations. As a predominantly non-branded business, it has not been an area of focus for us. Selling the business simplifies our operations and allows us to concentrate our efforts on our current portfolio of great British brands,” says Robert Schofield, chief executive of Premier Foods.
Combined with the proposed disposal of its meat-free business, Premier will have delivered total gross proceeds of £387m, significantly accelerating the delivery of its financial strategy and easing its debt burden.
“This proposed acquisition is an excellent strategic fit for our group and will enable us to further grow our business in the UK and continental Europe by offering our customers a broader range of ambient food products and brands,” remarks Ken Critchley, managing director of Princes. The transaction is expected to complete in late March 2011.
