Premier Foods Sells Jam for 200 Million Pounds

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:

Maynard Paton does not own any share mentioned in this article. The Motley Fool owns shares of The Hain Celestial Group. Motley Fool newsletter services have recommended buying shares of The Hain Celestial Group. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 1993479, ~/Articles/ArticleHandler.aspx, 4/16/2014 1:06:56 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement