Disposal

RNS Number : 0800H

Premier Foods plc

06 July 2012

 



6 July 2012

Premier Foods plc
("Premier Foods" or the "Group")

PREMIER FOODS SELLS ELEPHANT ATTA ETHNIC FLOUR BUSINESS TO ASSOCIATED BRITISH FOODS FOR £34 MILLION

Premier Foods today announces that it has sold its Elephant Atta ethnic flour business to Westmill Foods, a subsidiary of Associated British Foods plc ("ABF"), for a cash consideration of £34 million.

The agreement represents another step in the Group's 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 the Group's mill in Southampton.  

Commenting on the sale, Michael Clarke, Chief Executive Officer, Premier Foods said:

"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. The Elephant Atta brands are great brands that I'm sure will benefit from being part of Westmill Foods." 

Sale Highlights

·   The transaction included the distribution, sales, and  marketing of ethnic flours under the Elephant Atta, Elephant Chakki Gold and Fassal brands;

·   A consideration of £34 million was paid in cash on completion;

·   The sale was made on a cash and debt-free basis;

·   The  proceeds of the sale will be used to pay down debt;

·   All necessary consents under Premier Foods' finance facilities were received prior to the sale;

·   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;   

·   Premier Foods and ABF have entered into  transitional services arrangements to facilitate the smooth transfer of the business; and

·   One employee has transferred to Westmill Foods as part of the sale.

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.  As cumulative divestments take place, the Group will continue to challenge its overhead cost base to mitigate the impact of this and other transactions on earnings.

-Ends-

For further information, please contact:

Premier Foods plc                                                             01727 815 850

Mark Moran, Chief Financial Officer

Lisa Attenborough, Director of Communications

Maitland                                                                                020 7379 5151

Tom Buchanan

Brian Hudspith

Notes to editors:

1.    For further information on Premier Foods, see www.premierfoods.co.uk 

2.    Associated British Foods (www.abf.co.uk) is a diversified international food, ingredients and retail group with global sales of £11.1bn and 102,000 employees.  It is listed on the London Stock Exchange with a market capitalisation of over £10.2bn. It operates in 46 countries with significant businesses outside Europe in southern Africa, the US, China and Australia.  Its aim is to achieve strong, sustainable positions in markets that offer potential for profitable growth.  It strives to achieve this through a combination of growth of existing businesses, the acquisition of complementary new businesses and achievement of high levels of operating efficiency.  

3.    Westmill Foods is a subsidiary of ABF and a leading specialist food company in the UK and Europe, serving the chefs and owners of Chinese and Indian restaurants and takeaways, as well as a diverse range of Indian, Pakistani, Bangladeshi, Chinese, African and Caribbean consumers.  Its product range includes high quality rice, spices, sauces, oils, flour and noodles, which it sells to ethnic wholesalers as well as cash and carry, mainstream foodservice and the grocery multiples.

4.   Premier Foods is being advised by McQueen.

 

END

 

 

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