6 Jul 2012 --- Associated British Foods plc (ABF), the international food, ingredients and retail group, has announced the acquisition by Westmill Foods of Elephant Atta and smaller related ethnic flour brands from Premier Foods plc.

Elephant Atta was established in 1962 and is the leading ethnic flour brand in the United Kingdom. The brand is sold in a variety of medium, self-raising, white, brown and wholemeal flours and is used to make chapatti and other unleavened flat bread for daily consumption. Westmill Foods is the UK’s leading provider of ethnic food products to ethnic retailers and wholesalers.

George Weston, Chief Executive of Associated British Foods, said: “Elephant Atta is the UK’s leading ethnic flour brand and will complement Westmill’s other leading ethnic brands including Tolly Boy rice, Rajah spices, Lucky Boat noodles and Patak’s pastes and sauces.”

Premier Foods will continue to mill and package the flour with the brands being managed independently from Westmill Foods until regulatory approval is obtained. The cash consideration for the acquisition is £34 million.
 
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.