FDBusiness.com

Premier Foods has sold its Elephant Atta ethnic flour business to Westmill Foods, a subsidiary of Associated British Foods, for a cash consideration of £34 million. The agreement represents another step in Premier Foods’ strategy to prioritise investment behind its ‘power brands’ and divest selected, non-core businesses.

Elephant Atta is the UK’s leading brand of ethnic flour. The sale includes the Elephant Atta, Elephant Chakki Gold and Fassal brands predominantly manufactured and packed at Premier Foods’ mill in Southampton.

For the year ended 31 December 2011, the Elephant Atta business had reported revenues of £17.8 million and an EBITDA (before selling, general and administrative costs) of £6.4 million. The value of the transaction represents approximately 1.9x revenues. The gross assets of the Elephant Atta business as at 31 December 2011 were £3 million.

Premier Foods and ABF have entered into a co-packing agreement pursuant to which Premier Foods will continue to manufacture the Elephant Atta brands at its Southampton mill. The proceeds of the sale will be used to pay down Premier Foods’ debt.

Michael Clarke, chief executive of Premier Foods, comments: “We are continuing to deliver on our growth strategies, growing our ‘power brands’, divesting selected, non-core businesses and reducing costs on track with our plans.”

George Weston, chief executive of Associated British Foods, says: “Elephant Atta is the UK’s leading ethnic flour brand and will complement Westmill’s other leading ethnic brands including Tolly Boy rice, Rajah spices, Lucky Boat noodles and Patak’s pastes and sauces.”