Meat-free business sold by Premier Foods for £205m
PREMIER Foods has announced the sale of its meat-free business, including the Quorn brand which is based in North Yorkshire, to Exponent Private Equity and Intermediate Capital Group for £205m.
The cash deal for the business, which manufactures and sells products under the Cauldron and Stokesley-based Quorn brands, will help Premier to focus more resources and management time on its grocery and Hovis businesses and brands and will reduce the group’s debt and “facilitate diversification of funding sources”.
The deal will also help Premier reduce its average debt and EBITDA (earnings before interest, tax, depreciation, amortisation) ratios.
Premier said the £205m consideration was on a debt free and cash free basis representing a multiple of 10.6 times EBITDA.
The meat-free business expects to report sales of £128.8m and EBITDA of £19.3m in the year to December 31 and after costs and a pension fund contribution totalling £4.5m, the remaining proceeds of the sale will be used to pay down bank facility debt.
In December, Premier Foods said it had received bids from a number of parties, including multinational food groups and private equity firms for the business.
Premier said the deal should complete in early March on condition of bank and shareholder consent.
Commenting on the proposed disposal, Robert Schofield, chief executive of Premier Foods, said: “We are pleased to have concluded this sale agreement. It makes a significant contribution to reducing our debt.
“Having also recently completed the restructuring of our swaps portfolio, this deal represents another step along the road to achieving a capital structure which we believe will be more attractive to investors. It will also enable the business to focus further on building our current portfolio of great British brands.”
Chris Graham, founding partner of Exponent, said: “We are pleased to be acquiring Quorn and Cauldron which are strong and robust brands with a loyal customer base.
“With additional investment both in the UK and internationally we believe we can grow the business further. It fits well within Exponent’s portfolio which focuses on prominent and distinctive businesses and includes companies such as The Trainline.com, Dreams and The Ambassador Theatre Group.”
Quorn offers a wide range of meat alternative products made from mycoprotein, including mince, burgers, sausages, escalopes, cottage pies, lasagne and snacking products such as picnic eggs.
Cauldron is the UK’s number one brand in tofu and also produces a range of non-tofu products including falafels, vegetarian sausages and ready meals.
The meat-free business has three manufacturing sites in the United Kingdom and employs approximately 595 people.
The acquired business’s management team will continue to be led by Kevin Brennan, who will be chief executive of the new business. He will be supported by Clive Sharpe as chairman.
