Premier's future: rumours continue
In the middle of June, Premier announced it was selling its Sarson's, Haywards and Dufrais brands to Japanese food group Mizkan for £41M. These three brands are manufactured at Premier's Middleton factory near Manchester. All employees were expected to transfer to Mizkan when the deal goes through in July.
Mizkan is one of the world's leading vinegar manufacturers, with operations in Japan, the US, UK and other Asian countries.
Michael Clarke, chief executive of Premier Foods, said: "This agreement represents another important step in our strategy to focus on our power brands. I'm delighted that we have found a buyer such as Mizhkan."
Hartley's is made at Premier's Histon facility in Cambridgeshire. The site also manufactures marmalade, which is sold as Golden Shred, Frank Cooper's and Rose's. It also makes Gale's honey and Sun Pat peanut butter.
Other Premier businesses, including Bird's custard, Angel Delight, Marvel skimmed milk (made at its Knighton site) and Elephant Atta flour, are also reported to be on the sales block, with expectations they will bring in another £5070M.
However, even if these sales go through at the prices indicated, that will still leave Premier a little short of meeting the pledge to its bankers to raise £330M from asset disposals by June 2014.
City analysts have widely welcomed Premier's disposal strategy under the leadership of Clarke. The ceo aims to reduce the food group's huge debt burden, which stands at around £1.4bn and focus on eight power brands.
However, some analysts have suggested that Britain's biggest food manufacturer could itself become the subject of a takeover from acquisitive Chinese companies such as Bright Foods, which are seeking to build a bridgehead into Europe.
Investec analyst Martin Deboo told FoodManufacture.co.uk: "The recent Bright Foods Weetabix deal [acquired for £720M] was rather different as that was about Chinese players with low costs of funding staking out territory, rather than seeking 'hard' synergies. However, Bright could be a potential buyer for the whole of Premier Foods.
"Premier is a big UK business and priced favourably, which is one of the reasons why it is still interesting stock, despite its declining market capitalisation. We know Bright is interested in sizeable UK businesses, as it has looked at United Biscuits already."
