Premier Foods has agreed to sell its sweet spreads and jellies business, including the Hartley’s, Robertson’s, Frank Cooper, Keiller, Gales and Sun-Pat brands, to The Hain Celestial Group for a cash and share consideration of £200 million. The sale, which is subject to approval by Premier Foods’ shareholders and consent from Premier Foods’ banking syndicate, expected to complete by the end of October 2012. The consideration will be satisfied by £170 million in cash and the issue of shares in Hain Celestial with a value of at least £30 million at completion.
This sale represents the third divestiture Premier Foods has announced this year following agreement on its new financing arrangements in March 2012, and continues its strategy of prioritising investment behind its Power Brands and divesting selected, non-core businesses.
The sale includes Hartley’s, Britain’s most popular jam and a category leader in jelly-to-make and ready-to-eat jelly, and a portfolio of marmalade brands in Robertson’s, Frank Cooper, Keiller and the licence for Rose’s marmalade. Also included in the sale are Sun-Pat, the leading brand of peanut butter in the UK, Gales, the UK’s number two brand in honey and significant private label and business-to-business sales. The products are predominantly manufactured at Premier Foods’ Histon factory, near Cambridge, which will also be sold to Hain Celestial.
For the year ended 31 December 2011, sales of the sweet spreads and jellies business were £165.0 million, of which 59% were branded sales. EBITDA3 for the year ended 31 December 2011 was £38.3 million and Trading profit was £36.1 million. The gross assets of the business being sold were £161.0 million as at 30 June 2012.
Michael Clarke, chief executive of Premier Foods, comments: “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 £275 million of the £330 million disposal proceeds that we committed to achieving by June 2014. This will represent a 22% reduction in our net debt since the half year.”
Irwin D Simon, founder, president and chief executive of Hain Celestial, says: “In order for Hain Celestial to become the largest healthy food company in the United Kingdom, we needed to expand into ambient 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.”