Premier Foods disposes of pickles business in £92m deal
PREMIER Foods has agreed the sale of its Staffordshire-based sweet pickles and table sauces operation to Japanese food group to Mizkan in a deal worth £92.5m.
The move, which had been widely expected, is subject to approval by Premier Foods’ shareholders and consent from its banking syndicate.
Once the disposal is completed, the company will have delivered around £370m in disposal proceeds since March this year, significantly exceeding the £330m target it committed to achieve by June 2014 as part of its new financing arrangements.
This has helped contribute to a 30% reduction in net debt levels since the position reported the company in its interims.
The disposal includes Branston sweet pickle, ketchup, relish, salad cream and mayonnaise, together with the company’s Bury St Edmunds factory. The deal is expected to complete early next year and all employees at the site are expected to transfer to Mizkan following an appropriate consultation process.
Following completion of the sale, the branded sales mix of Premier’s Grocery business will increase to approximately 90%.
Michael Clarke, Chief Executive Officer of Premier Foods, said: “I’m delighted to have exceeded our disposal target 20 months early while at the same time delivering three successive quarters of sales growth and taking £40m of overhead costs out of the business this year. We can now focus our attention on driving further momentum in our Grocery business and unlocking value in Bread.
“Our disposals since March have achieved a healthy average EV/EBITDA multiple of 8.9x based on current year trading and expected overhead cost reductions. This is a good result in the current market.”
Kazuhide Matazaemon Nakano VIII, Chief Executive Officer, Mizkan, added: “Branston Sweet Pickle is an iconic brand that has established a market leading position. The Branston brand is also an excellent strategic fit with our global portfolio and adds to our solid foundation for growth in the UK.”
Premier and Mizkan have entered into a co-packing agreement which will see the Japanese firm continue to manufacture certain cooking sauces and other products at the Bury St Edmunds site for the next 15 years.
For the financial year ended December 31, 2011, sales of the sweet pickles and table sauces business were £66m, of which 54% were branded sales. EBITDA for the year to December 31, 2011 was £11.7m and trading profit was £8.5m.
Nakano, part of the Mizkan group, acquired Premier Foods’ vinegar and sour pickles business in a £41m deal earlier this year.
