Premier agrees to sell tea business to Apeejay Surrendra Group

14/10/05 Premier Foods plc announces that it has agreed to sell its tea business to Apeejay International Tea Limited, a subsidiary of the Apeejay Surrendra Group (“Apeejay”), for £80 million. The consideration will be paid in cash and the transaction is expected to complete shortly. Premier will use the proceeds to reduce net debt.

The business being sold includes the Typhoo, London Fruit & Herb, Lift and other associated brands, own label contracts and Premier's tea blending and packing facility at Moreton, Wirral, which employs 249 people. In the year to 31 December 2004 the tea business had net sales of £70.2 million and operating profit of £11.2 million after estimated attributable administrative overheads1. The book value of the assets being sold was £25.7m at 2 July 2005.

Premier and Apeejay have entered into agreements whereby Premier will provide services to Apeejay following completion, including transitional commercial and administrative support, logistics and the manufacture of Lift and Typhoo QT instant teas.

Launched in 1903 by Birmingham grocer John Summer, Typhoo has been waking the nation with its favourite cuppa for nearly 100 years. Today, Typhoo is one of Britain's favourite teas.

As well as producing original tea bags and producing the UK's number one decaffeinated tea, there are a number of other alternatives in the Typhoo range with “Typhoo Fruit & Herb”, “Typhoo Green Tea” and “Typhoo QT” instant white tea.

Other brands included in the sale include the London Fruit & Herb, Natureland and Heath & Heather fruit and herb tea brands for the export and health food markets and Freshbrew, Glengettie, Melroses and Ridgeways regional and speciality teas.

Premier, then Hillsdown Holdings plc, acquired Typhoo together with a number of other brands in 1989 when it acquired Premier Brands Limited.Premier Brands Limited was formed in 1986 when a management buyout team acquired the business from Cadbury Schweppes plc.The Lift instant tea business was acquired by Premier in 2001 from Northern Foods plc.

The Apeejay Surrendra Group, founded in 1910 and headquartered in Calcutta, is one of India's largest groups and has a diversified portfolio of businesses with interests in tea, hospitality, retail, shipping, financial services and property. Apeejay's tea operations are directed through two principal tea companies, Apeejay Tea Limited and Empire & Singlo Tea Ltd, which have been in operation for over 100 years and are amongst the oldest tea companies in India.

Apeejay Tea is amongst the largest producers in India with a workforce of over 40,000 and 17 estates producing over 21 million kilograms of tea from a plantation area of over 30,000 acres.Three of its single estate teas - Sessa, Pengaree and Khobong - are sold in Harrods and other premium tea boutiques across the world. Apeejay Tea also sells its teas through its own premium tea boutiques, Flurys and Cha bar, and via teastall.com.