Premier Foods to Sell its Vinegar and Sour Pickles Business to Mizkan Group

The brands are predominantly manufactured at the Group’s Middleton factory, near Manchester, and all employees at the site are expected to transfer to the buyer following an appropriate consultation process.

15 Jun 2012 --- Premier Foods has reached an agreement to sell its vinegar and sour pickles business, including the Sarson’s, Haywards and Dufrais brands, to Mizkan, for a cash consideration of £41 million. The sale is expected to complete by the end of July 2012.

This agreement represents a further step in the Group’s strategy to prioritise investment behind its eight Power Brands and divest selected, non-core businesses.

The Sarson’s and Haywards brands are the leaders in their respective categories of malt vinegar and pickles in vinegar while Dufrais is the number two brand in speciality vinegar. The brands are predominantly manufactured at the Group’s Middleton factory, near Manchester, and all employees at the site are expected to transfer to the buyer following an appropriate consultation process.

Commenting on the sale, Michael Clarke, Chief Executive Officer, Premier Foods said: “This agreement represents another important step in our strategy to focus on our Power Brands.  I’m delighted that we have found a buyer such as Mizkan. Our vinegars and sour pickles business and employees will greatly benefit from being part of a global player focused on vinegar and liquid condiments.” 

Kazuhide Matazaemon Nakano VIII, Chief Executive Officer, Mizkan, commented: “We are excited to acquire two strong and iconic brands that have such a deep heritage in the UK. Sarson’s and Haywards are beloved by consumers and we look forward to investing in the brands and adding to their legacy. They fit well with our global portfolio, are an excellent strategic fit and provide a solid foundation for growth in the UK.”

Agreement Highlights
• The transaction includes the production, distribution, sales and marketing of the Sarson’s, Haywards and Dufrais brands, the associated private label business, the Middleton site and the pickled beetroot and piccalilli lines at the Group’s Bury St Edmunds factory. 
• Consideration of £41 million is payable in cash on completion and is subject to an adjustment for the value of stock transferred at completion.
• The sale is on a cash and debt free basis.
• The proceeds of the sale will be used to pay down debt.
• The sale is not subject to any conditions precedent.
• All necessary consents under Premier Foods’ finance facilities have been received.
• Premier Foods and Mizkan have entered into a co-packing agreement pursuant to which Premier Foods will continue to manufacture Haywards pickled beetroot and piccalilli for Mizkan at its Bury St Edmunds site for a period of up to 12 months.
• Premier Foods and Mizkan have entered into transitional services arrangements to facilitate the smooth transfer of the business.

For the year ended 31 December 2011, the vinegar and sour pickles business had reported revenues of £34.0 million and EBITDA of £6.2 million (before selling, general and administrative costs). The gross assets of the business being sold as at 31 December 2011 were £31.7 million. The Group expects the impact of the transaction to be initially earnings dilutive.