Blog:
Premier's latest sale cheers City
Dean Best | 30 October 2012
Premier Foods' latest deal to dispose of a household brand - this time Branston pickle - sent the UK firm's shares soaring today (30 October).
The company announced a GBP93m (US$149.5m) deal with Japanese food group Mizkan - to which it had sold another set of assets, including the Haywards pickled onion brand, earlier this year.
The transaction, which Premier expects to finalise early next year, is the latest the company has completed in the last 18 months or more as it lowers its debt pile and focuses on a select group of brands.
Premier CEO Michael Clarke said the sale would mean it exceeds its target of bringing in GBP330m in proceeds from disposals 20 months before a June 2014 deadline it signed up to under its financing agreements.
Shares in the company, which owns brands including Batchelors soup and Oxo gravy, jumped after the news and were up 6.65% at 108.25p.
Panmure Gordon analyst Graham Jones took a considered view of the sale and of Premier's financial position.
Jones said the deal was worth 1.4x Branston's sales and represented a 7.9x EV/EBITDA multiple for 2011, which, he said, was a "reasonable price" and a "better multiple than previous disposals".
However, he added: "Even after these recent disposals, Premier will remain highly geared and it still has a very large pension deficit which has to be serviced from a smaller cash generative base. For now we stick with our 'hold' recommendation and 90p price target."
BLOG
UK regulator shines light on Amazon's Deliveroo investment
Amazon's move to invest in UK food-delivery business Deliveroo caught the eye when it was announced in May – but it’s also attracted the attention of the country’s competition regulator....
BLOG
Amazon tries again in UK food delivery
Perhaps today's most eye-catching corporate food story here in the UK is Amazon's decision to invest in food-delivery business Deliveroo....
Most Popular
Insights
- Livekindly CEO on meat-free firm's ambitions
- Plant-based meat's Asia optimism
- Does the plant-based pet-food niche have legs?
- Nurturing China's growing interest in cheese
- How might Covid impact food company strategy?
News
- Danone shareholders seek reassurances at AGM
- Conagra sees structural shift to eating at home
- Impossible Foods 'readying stock-exchange listing'
- Vibrant Foods strikes another UK deal
- Chobani dips toe in direct-to-consumer
Market research