UK: Premier sells Elephant Atta ethnic flour arm to ABF

Premier Foods plc

6 July 2012

Premier Foods plc

("Premier Foods" or the "Group")

PREMIER FOODS SELLS ELEPHANT ATTA ETHNIC FLOUR BUSINESS TO ASSOCIATED BRITISH FOODS FOR £34 MILLION

Premier Foods today announces that it has sold its Elephant Atta ethnic flour business to Westmill Foods, a subsidiary of Associated British Foods plc ("ABF"), for a cash consideration of £34 million.

The agreement represents another step in the Group's strategy to prioritise investment behind its Power Brands and divest selected, non-core businesses.

Elephant Atta is the UK's leading brand of ethnic flour. The sale includes the Elephant Atta, Elephant Chakki Gold and Fassal brands predominantly manufactured and packed at the Group's mill in Southampton.  

Commenting on the sale, Michael Clarke, Chief Executive Officer, Premier Foods 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." 

Sale Highlights

·   The transaction included the distribution, sales, and  marketing of ethnic flours under the Elephant Atta, Elephant Chakki Gold and Fassal brands;

·   A consideration of £34 million was paid in cash on completion;

·   The sale was made on a cash and debt-free basis;

·   The  proceeds of the sale will be used to pay down debt;

·   All  necessary  consents  under Premier  Foods'  finance  facilities  were received prior to the sale;

·   Premier Foods and ABF have entered into a co-packing agreement pursuant to which Premier Foods will continue to  manufacture the Elephant Atta brands  at its Southampton mill;   

·    Premier  Foods   and  ABF  have   entered  into   transitional   services  arrangements to facilitate the smooth transfer of the business; and

·   One employee has transferred to Westmill Foods as part of the sale.

For the year ended 31 December 2011, the Elephant Atta business had reported revenues of £17.8 million and an EBITDA (before selling, general and administrative costs) of £6.4 million. The value of the transaction represents approximately 1.9x revenues. The gross assets of the Elephant Atta business as at 31 December 2011 were £3 million. As cumulative divestments take place, the Group will continue to challenge its overhead cost base to mitigate the impact of this and other transactions on earnings.

Original source: Premier Foods