Premier Foods Sells Brookes Avana to 2 Sisters For £30 Million
Premier Foods has agreed to sell its loss-making Brookes Avana business comprising of RF Brookes chilled foods and Avana Bakeries to 2 Sisters Food Group for £30 million in cash. The move represents an important step in streamlining Premier’s portfolio following its announcement in October that it will focus investment behind eight ‘power brands’ and dispose of selected businesses further enabling it to deleverage the business.
Employing just over 2,000 people, Brookes Avana operates from three sites atNewport(RF Brookes and Avana Bakeries) and Leicester (RF Brookes). It is intended that all of the employees will transfer with the business following appropriate discussions with them and their representatives.
Brookes Avana supplies chilled convenience products, including ready meals, accompaniments, chilled pizza and pies. Avana is one of the UK’s leading suppliers of high quality bakery, cake and dessert products. Brookes Avana reported a trading loss of £0.1 million on a turnover of £203.6 million for the year ended 31 December 2010. Before allocated group and corporate costs, trading profit for the year was £9.4 million. As at 31 December 2010, Brookes Avana had net assets of £104.1 million, gross assets of £147.4 million including intangible assets of £65.2 million.
Michael Clarke, chief executive of Premier Foods.
The losses have deepened in the current financial year. For the first half, ended 25 June 2011, Brookes Avana reported a trading loss of £13.3 million. Indeed trading is likely to be similar in the second half to that of the first half.
“The sale of Brookes Avana underlines our commitment to focus the business on growing a smaller number of brands,” explains Michael Clarke, chief executive of Premier Foods. “Brookes Avana will have a better opportunity to grow with 2 Sisters Food Group given their focus in the chilled food sector.”
The net sale proceeds (after estimated disposal costs of £1.8 million) will be used by Premier to repay bank borrowings. The sale is being made on a cash and debt free basis. The transaction is expected to complete by early 2012;
Ranjit Singh, chief executive of 2 Sisters Food Group.
Ranjit Singh, chief executive of 2 Sisters Food Group, says: “We are delighted to reach agreement on the proposed acquisition of Brookes Avana. The business has a strong track record in delivering high quality products for its customers and would provide a growth platform for 2 Sisters and increased product diversity to serve every eating occasion. This is an excellent strategic fit and, following completion, we will focus on delivering growth opportunities and enhancing the performance of the business.”
Premier Foods and 2 Sisters have entered into manufacturing agreements in relation to certain products currently produced by the Brookes Avana business.
