Disposal

RNS Number : 1032U

Premier Foods plc

15 December 2011

 



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

PREMIER FOODS REACHES AGREEMENT TO SELL FOUR IRISH BRANDS TO THE BOYNE VALLEY GROUP FOR €41.4 MILLION

Premier Foods today announces that it has signed an agreement with The Boyne Valley Group to sell its four Irish Brands comprising Chivers, Gateaux, McDonnells and the Erin licence ("the Irish Brands") for a gross cash consideration of €41.4 million.

The agreement represents a further step in the Group's strategy to focus investment behind its eight Power Brands and follows the announcement on 8 December of its intention to sell its chilled food division, Brookes Avana, to the 2 Sisters Food Group. 

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

"The sale of these Irish Brands will enable us to focus on supporting our Power Brands in line with our overall strategy.  Coming hard on the heels of the announcement of the Brookes Avana sale agreement, this underlines our determination to streamline the business to help restore profitable growth quickly."

John Harkin, Chief Executive Officer, The Boyne Valley Group, said:

"We are pleased to be acquiring these strong and well established Irish Brands with a loyal customer base.  With additional investment, we believe we can grow these brands further.  They fit well within our existing food portfolio which includes olive oil, relishes, home-baking and honey."

Highlights of the sale include:

-     Sale of the four Irish Brands comprising Chivers, Gateaux, McDonnells and the Erin 
licence and their sale, distribution and associated stock;

-     The gross consideration of €41.4 million is payable in cash on completion subject to a 
stock on completion adjustment;

-     The net sale proceeds, after tax, will be held to repay bank borrowings (after
estimated disposal costs totalling €1.4 million);  

-     The sale will be made on a cash and debt free basis;

-     All necessary consents under Premier Foods' finance facilities have been received and the transaction is expected to complete in early 2012;

-     Post completion of the sale, there will be a short transition period during

which Premier Foods will continue to support The Boyne Valley Group while it

integrates the Irish Brands into its portfolio; and

-     In addition, Premier Foods and The Boyne Valley Group have entered into

manufacturing agreements within which Premier Foods will continue to manufacture the Irish Brands for three years.

For the year ended 31 December 2010, the Irish Brands reported a turnover of €29.5 million and an EBITDA of €10.0 million² (before selling, general, administrative and fixed logistics costs).  At 31 December 2010, the Irish Brands had net and gross assets of €39.2 million.

For the 12 months to 31 October 2011, the Irish Brands had turnover of €26.2 million and EBITDA of €9.4 million² (before selling, general, administrative and fixed logistics costs).  Prior to re-structuring cost savings previously outlined at the Q3 IMS, the effect of the transaction on the Group will be initially earnings dilutive.

-Ends-

Notes to editors:

1.   The sale includes the following:

-    

-     Chivers - range of jams and jelly.  Chivers is Ireland's 3^rd largest

-     Ambient Dessert Brand* and Chivers Jelly is the 2^nd largest jam brand on the

-     market**;

-     Erin - is a trademark of Erin Foods Ltd and Premier Foods produces soups under the

-     licence Erin is the 2^nd largest ambient soup in Ireland*;

-     Gateaux - 20 types of traditionally baked cakes and the 3^rd largest branded cake* in

-     Ireland; and

-     McDonnells - Supernoodles (4^th largest Dried Pasta & Noodle in Ireland*) and Curry

-     Sauce (No**1 in the Irish curry sauce market).

-     *Market Position Source Checkout Top 100 Brands August 2011 / ** AC Nielsen Scantrack Data October 2011. 

-    

2.   EBITDA is stated after the manufacturing agreement with the Boyne Valley Group.

3.   Premier Foods is being advised by Stamford Partners and A&L Goodbody.

4.   Premier Foods Ireland forms part of the Group's Grocery division and is the fifth largest supplier of ambient groceries to the Irish market.

5.   Premier Foods Ireland is based in Dublin and currently employs 57 people.

6.   It is proposed that two employees from Premier Foods Ireland will TUPE transfer to The Boyne Valley Group. 

For further information, please contact:

Premier Foods plc                01727 815 850

Lisa Attenborough, Group Director of Communications

Richard Godden, Head of Investor Relations

Maitland                                 020 7379 5151

Tom Buchanan

Brian Hudspith

 

END

 

 

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