Premier Foods Disposes Flour Business for 34 Million Pounds

PUBLISHED: Jul 06 2012 @ 07:19 | Comments (1) | More info about Kenneth G. Mondero

British food producer Premier Foods plc (LSE:PFD) has disposed its flour business, one of the many divestments the company is doing, for £34 million to further trim down its business and pay off debts.

The Elephant Atta, Elephant Chakki Gold, and Fassal brands, popular brands of flour used in making chapatti and other unleavened bread, was sold to Westmill Foods, a subsidiary of the international food and ingredients group Associated British Foods plc (LSE:ABF).

“The agreement represents another step in the Group’s strategy to prioritise investment behind its Power Brands and divest selected, non-core businesses,” London-listed Premier Foods said in a statement.

Two weeks ago, Premier Foods sold its vinegar and sour pickles business for £41 million, the proceeds of which will be used to lower down its debt, reported at £995 million as of 31^st December 2011.

The transaction, which will also be on a cash and debt-free basis, includes the distribution, sale, and marketing of the brands.

Premier Foods will continue to manufacture the flours at this Southampton mill through a co-packing agreement entered by the company and ABF, the notice stated.

Complementary Brand

The Elephant Atta brand was established in 1962 and is being sold in a variety of medium, self-rasing, white, brown, and wholemeat flours.

For the year ended 31^st December 2011, the business raised £17.8 million in revenue and EBITDA of £6.4 million for a gross asset value of £3 million.

ABF’s Chief Executive, George Weston, said the brand will complement Westmill’s already existing brands that include Tolly Boy rice, Rajah Spices, Lucky Boat noodles, and Patak’s pastes and sauces.

Westmill Foods is a specialist food company providing rice, spices, sauces, oils, flour, and noodles to Indian, Pakistani, Bangladehi, Chinese, African, and Caribbean consumers, as well as wholesalers and restaurants and takeaways.

CEO Comments

Michael Clarke, Chief Executive Officer of Premier Foods, in speaking about the sale and the direction of the company said:

“We are continuing to deliver on our growth strategies, growing our Power Brands, divesting selected, non-core businesses and reducing costs on track with our plans. The Elephant Atta brands are great brands that I’m sure will benefit from being part of Westmill Foods.”

Company Spotlight

Premier Foods is the largest branded food producer in the United Kingdom, supplying retail, wholesale, foodservice, and other customers with more than 35 branded grocery and bread products.

In London trading, shares of Premier Foods went up slightly by 1.42% to 89.50 pence at 1:00 PM.

FTSE 100 Associated British Foods rose 0.86% to £12.95 a share, following the news.

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