Premier Foods spins off Hovis to new JV

PREMIER Foods has struck a deal to sell 51% of its bread business Hovis to US private equity firm Gores Group.

Hovis Ltd will become a stand-alone joint venture between the two parties and allow Premier to focus on its grocery brands which include Ambrosia, Batchelors, Bisto and Mr Kipling. The transaction values the Hovis at £87.5m.

Premier Foods said the deal – first mooted late last year – would allow it to invest £28m in its grocery business, while the it and Gores have agreed to jointly invest £45m cash into the joint venture, which it said would  unlocks a £200m five-year investment programme for Hovis.

Hovis, which traces its roots back to the 1880s, and is said to have  been founded in Cheshire, has flour milling operation on Trafford Park.

The Gores Group is paying £30m for its 51% stake in the JV, of  which £15m is deferred and contingent on the future performance of Hovis.

The deal includes the Hovis, Mothers Pride, Ormo, Granary and Nimble brands. Premier will retain the McDougall’s flour brand, but will supply the joint venture with flour.

The name Hovis was introduced in 1890 and  is derived from the Latin Hominis Vis meaning strength of a man.