FDBusiness.com

Premier Foods is selling its vinegar and sour pickles business, including the Sarson’s, Haywards and Dufrais brands, to Japan-based Mizkan, for a cash consideration of £41 million. The sale is expected to complete by the end of July 2012.

The disposal represents a further step in Premier Foods’ strategy to prioritise investment behind its eight ‘power brands’ and divest selected, non-core businesses.

For the year ended 31 December 2011, the vinegar and sour pickles business had reported revenues of £34.0 million and EBITDA of £6.2 million. The gross assets of the business being sold as at 31 December 2011 were £31.7 million. The proceeds of the sale will be used to pay down debt.

The Sarson’s and Haywards brands are the leaders in their respective categories of malt vinegar and pickles in vinegar while Dufrais is the number two brand in speciality vinegar. The brands are predominantly manufactured at the group’s Middleton factory, near Manchester, and all employees at the site are expected to transfer to the buyer.

The transaction includes the production, distribution, sales and marketing of the Sarson’s, Haywards and Dufrais brands, the associated private label business, the Middleton site and the pickled beetroot and piccalilli lines at Premier Foods’ Bury St Edmunds factory.

Premier Foods and Mizkan have entered into a co-packing agreement pursuant to which Premier Foods will continue to manufacture Haywards pickled beetroot and piccalilli for Mizkan at its Bury St Edmunds site for a period of up to 12 months.

Mizkan is one of the leading vinegar manufacturers in the world with operations in Japan, the US, the UK and other Asian countries. It has a stable of well-known international brands under the ‘mizkan’ umbrella brand and is a leader in the liquid condiment category.