Premier Foods, which owns well-known brands such as Mr Kipling, Ambrosia and Hovis, has agreed to sell its sandwich spread business to US-based Hain Celestial for £200m.
A conditional agreement has been reached for to sell its sweet spreads and jellies business, including the Britain’s biggest selling jam Hartley’s, Robertson’s marmalade and peanut butter brand Sun-Pat, and is set to be complete by the end of October 2012.
Sales of the sweet spreads and jellies business amounted to £165m for the 12 months to 31 December 2011, joining Hain Celestial’s growing foods business that already contains Covent Garden Soup Co and Linda McCartney. The proceeds of the sale of the business will be used to pay down debt at Premier Foods.
It is the third sale Premier Foods has announced this year following agreement as it attempts to cut debt following refinancing in March, and continues its strategy of prioritising investment behind what it has deemed its power brands, Batchelor’s, Bisto, Ambrosia, Hovis, Loyd Grossman, Mr Kipling, Oxo and Sharwood’s.
Also included in the sale is the marmalade brand Frank Cooper and Gales, the UK’s second biggest selling brand of honey. The products are predominantly manufactured at the Group’s Histon factory, near Cambridge, which will also be sold to Hain Celestial as part of the agreement.
All employees at the site, with the exception of a number of group employees, are expected to transfer to the buyer following an appropriate consultation process. Irwin Simon, founder, president and CEO of Hain Celestial said that the experienced workforce and management at the Histon facility was formed an attractive part of the acquisition.
Commenting on the sale, Michael Clarke, CEO at Premier Foods, said: “This divestment is a major step forward in our strategy to simplify the business and focus on our power brands. Following completion of this sale, we will have raised around £275m of the £330m disposal proceeds that we committed to achieving by June 2014.”
Mr Clarke said that the sweet spreads and jellies business was not core to Premier Foods, but Mr Simon stated that he wants Hain Celestial to become the largest healthy food company in Britain, noting that consumers are increasingly looking to pick a healthier option.
“In order for Hain Celestial to become the largest healthy food company in the UK, we needed to expand into grocery where we have seen health and nutrition gain traction with consumers. The acquisition of the Premier Foods brands furthers our goal to expand in the United Kingdom with the addition of ambient grocery products.”
The sale represents a 22% reduction in Premier Foods’ net debt since the half year. the company sold its Sarson’s vinegar brand to Japan’s vinegar maker Mizkan, in June for £41m and offloaded its flour business Elephant Atta to Associated British Foods.