The new company will assume the name of NFT Distribution Holdings Ltd and completion of the deal is expected within 14 days, following employee consultation and issue of new transport operating licences.
The purchasing group has agreed to pay GBP44.5m cash on completion together with a loan note of GBP6.7m payable to Northern Foods not later than 12 months after completion.
Northern Foods said that the majority of the proceeds would be used to reduce debt, with a payment of GBP10m to be made to its Pension Scheme.
It is the first sale of Northern Foods’ wider disposal programme that was announced on 31 May 2006, which will see the sale of businesses currently representing approximately 40% of group revenue in order to concentrate on fewer, core categories.
Northern Foods’ chief executive Pat O’Driscoll said: “Today’s announcement represents a very positive first step in our disposal programme and we are delighted to have reached a successful conclusion to this sale. Distribution is not core to Northern Foods going forward but this is a great business and we wish NFT and its employees well.”
NFT, which was established by Northern Foods in 1979, had a turnover of GBP111.4m and operating profit of GBP3.9m for the year ending 1 April 2006.
NFT managing director David Frankish said: “It’s with great pleasure that we are able to take on the running of NFT as a separate business and with an existing strong customer base. The position of the company as the market leader in primary chilled distribution affords us an excellent opportunity to not only maintain our high levels of service and delivery, but also develop the business into new areas.
“The management buyout and independence of NFT represent an exciting opportunity for the team and we are delighted to be working alongside Phoenix as they have a proven pedigree in supporting and developing medium sized UK based businesses.”