Premier Foods agrees £16m JV in Staffordshire
PREMIER Foods Premier Foods has reached a conditional agreement with Specialty Powders Holding on a £16m stand-alone joint venture to process and pack powdered beverages and desserts at Premier Foods’ Knighton facility in Staffordshire.
The food company said the move was in line with its strategy to maximise value and efficiencies from its Grocery division.
The new joint venture, to be named Knighton Foods, will combine dry powders manufacturing capabilities and assets from both parties at the Knighton site. Premier said this would enable cost synergies and scale efficiencies by utilising spare capacity at the factory.
It said the agreement would also enable the transfer of two production lines from Knighton to Premier Foods’ manufacturing plant in Ashford, Kent, resulting in significant further efficiencies within its Grocery infrastructure.
Gavin Darby, Chief Executive Officer of Premier Foods said: “This innovative agreement will help to improve the efficiency of Premier’s Grocery infrastructure and, at the same time, allows us to benefit from a dedicated team with expertise that can support our powdered beverages and desserts business.
“I’m delighted that, in Specialty Powders, we’ve found a highly successful, entrepreneurial partner who is committed to growing the combined business. This is a very positive development both for Premier Foods and for our employees at Knighton.”
Mike Kirby, majority shareholder and Group Managing Director of Specialty Powders, said: “This is a fantastic opportunity for both parties. Knighton Foods will have a strong focus on dry powder products with the ability to invest in new processes, products and packaging formats. Our combined technical expertise and manufacturing capabilities will ensure that we continue to deliver high quality products for our customers and consumers, and enable us to develop a successful, broad-based powder processing and packing business for the future.”
Under the terms of the agreement, Specialty Powders will contribute its wholly-owned businesses, Phoenix Foods and Agglomeration Technology, to the joint venture, in return for a 51% controlling stake and a loan from the joint venture to repay its existing debt.
Premier Foods, which used to operate the Hovis bakery in Aston until its closure two years ago, will contribute the Knighton site and assets (other than the two production lines) to the JV, together with its private label and business-to-business sales of powdered beverages and desserts. This will be in consideration for a 49% stake in the JV and a promissory note of a principal amount equal to the loan to Specialty Powders.
Premier Foods will also retain the substantial majority of its branded sales currently made at Knighton, including under the Bird’s, Angel Delight and Marvel brands, which will be manufactured either at its Ashford site or at Knighton by the joint venture under a co-packing arrangement.
