Premier Foods: reaches agreement to sell Irish Brands

London / UK. (pf) Premier Foods PLC 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 for a gross cash consideration of 41,4 million EUR.

The agreement represents a further step in the Group´s strategy to focus investment behind its eight Power Brands and follows the announcement of its intention to sell its chilled food division, Brookes Avana, to the 2 Sisters Food Group (see b:eu last week on 2011-12-13).

Commenting on the proposed sale, Premier Foods´CEO Michael Clarke 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».

The Boyne Valley Group´s CEO John Harkin 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 EUR 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 EUR);
• 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 EUR and an Ebitda of 10,0 million EUR (before selling, general, administrative and fixed logistics costs). At 31 December 2010, the Irish Brands had net and gross assets of 39,2 million EUR.

For the twelve months to 31 October 2011, the Irish Brands had turnover of 26,2 million EUR and Ebitda of 9,4 million EUR (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.

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Addendum: The sale of the four Irish Brands includes the following …

• Chivers: range of jams and jelly. Chivers is Ireland´s third largest Ambient Dessert Brand and Chivers Jelly is the second largest jam brand on the market;
• Erin: is a trademark of Erin Foods Limited and Premier Foods produces soups under the licence Erin is the second largest ambient soup in Ireland;
• Gateaux: 20 types of traditionally baked cakes and the third largest branded cake in Ireland; and
• McDonnells: Supernoodles (fourth largest Dried Pasta and Noodle in Ireland) and Curry Sauce (No 1 in the Irish curry sauce market).