Premier Foods to Sell Brookes Avana Business to 2 Sisters
The agreement represents an important step in streamlining the Group’s portfolio following its announcement on 7 October that it will focus investment behind eight Power Brands and dispose of selected businesses further enabling it to deleverage the business.
Dec 9 2011 --- Premier Foods has signed an agreement with 2 Sisters Food Group to sell its Brookes Avana business comprising of RF Brookes chilled foods and Avana Bakeries for a cash consideration of £30 million.
The agreement represents an important step in streamlining the Group’s portfolio following its announcement on 7 October that it will focus investment behind eight Power Brands and dispose of selected businesses further enabling it to deleverage the business.
Commenting on the proposed sale, Michael Clarke, Chief Executive Officer, Premier Foods, said:
“The sale of Brookes Avana underlines our commitment to focus the business on growing a smaller number of brands. Brookes Avana will have a better opportunity to grow with 2 Sisters Food Group given their focus in the chilled food sector. I wish them every success in the future.”
Ranjit Singh, Chief Executive, 2 Sisters Food Group, said: “We are delighted to reach agreement on the proposed acquisition of Brookes Avana. The business has a strong track record in delivering high quality products for its customers and would provide a growth platform for 2 Sisters and increased product diversity to serve every eating occasion.
“This is an excellent strategic fit and, following completion, we will focus on delivering growth opportunities and enhancing the performance of the business.”
Highlights of the agreement include:
• Sale of the three Brookes Avana sites at Newport (RF Brookes and Avana Bakeries) and Leicester (RF Brookes). It is intended that all of the employees will transfer with the business following appropriate discussions with them and their representatives;
• The consideration of £30 million is payable in cash on completion, subject to a post-completion working capital adjustment;
• The net sale proceeds will be held to repay bank borrowings, as required (after estimated disposal costs totalling £1.8 million);
• The sale will be made on a cash and debt free basis;
• All necessary consents under Premier Foods’ finance facilities have been received and the transaction is expected to complete by early 2012;
• Post completion of the sale, there will be a short transition service agreement covering IT, Procurement and Technical during which Premier Foods will continue to support 2 Sisters while it integrates Brookes Avana into its operations; and
• In addition, Premier Foods and 2 Sisters have entered into manufacturing agreements in relation to certain products currently produced by the Brookes Avana business.
For the year ended 31 December 2010, Brookes Avana reported a turnover of £203.6 million and a trading loss of (£0.1) million. Before allocated Group and Corporate costs, Trading Profit for the year ended 31 December 2010 was £9.4 million.
As at 31 December 2010, Brookes Avana had net assets of £104.1 million, gross assets of £147.4 million including intangible assets of £65.2 million.
At the Half Year, ended 25 June 2011, Brookes Avana reported a trading loss of (£13.3) million and at the Q3 IMS, on 7 October, the Group guided that Brookes Avana trading was likely to be similar in the second half to that of the first half.
