Watch stocks you care about
Your own personalized stock watchlist!
It's a 100% FREE Motley Fool service...
LONDON -- Premier Foods (LSE: PFD.L ) advanced 2 pence to 68 pence in early London trading after the group announced a 200 million pound disposal.
Premier, which claims to be Britain's largest branded food group, said it had reached an agreement to sell its sweet spreads and jam division to Hain Celestial (Nasdaq: HAIN ) .
Brands involved in the transaction include Hartley's jam, Robertson's marmalade and Sun-Pat peanut butter. Last year, the division enjoyed sales of 165 million pounds and trading profits of 36 million pounds.
The deal with Hain requires approval from Premier's shareholders and is expected to be completed by the end of October.
Commenting on the sale, Michael Clarke, Premier's chief executive, said:
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 pounds] of the [330 million pounds] 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 Simon, chief executive of Hain Celestial, added:
The acquisition of the Premier Foods brands furthers our goal to expand in the United Kingdom with the addition of ambient grocery products. Key to the success will be the experienced workforce and management at the Histon facility who we look forward to working with.
Today's announcement is Premier's latest step on the road to recovery. The purchase of RHM, the manufacturer of Hovis bread, for 2 billion pounds including debt during 2007, triggered a variety of operational and financial problems that led to dividend payments being suspended in 2008 and a rescue rights issue being launched in 2009.
A profit warning in October last year, which prompted talks with banks about debt covenants, pushed Premier's shares down to 33 pence -- some 99% off their all-time high. However, news of disposals did help drive the shares to 180 pence earlier this year, providing brave investors near-sixfold gains within five months.
Such returns suggest it may pay to keep an eye on Premier, as more good news could see further handsome returns.
In fact, if you are keen to earn generous returns from higher-risk shares, this free Motley Fool report could help you on your way.
The report explains how taking a contrarian view and backing unloved companies can be vital steps on the path to the magic 1,000,000 pounds milestone. Maybe one day, a recovering Premier could be the share that transforms your wealth.
Just click here to download the report today. But hurry, all Fool reports are free for a limited time only.
Are you looking to profit from this uncertain economy? "10 Steps to Making a Million in the Market" is the very latest Motley Fool guide to help Britain invest. Better. We urge you to read the report today -- it's free.
Further Motley Fool investment opportunities: