Hain Celestial to acquire Premier Foods’ packaged grocery brands

Hain Celestial, a US-based natural and organic food products company, has entered into an agreement to acquire some of the packaged grocery brands of UK-based Premier Foods in a £200m cash-and-stock deal.

Under the agreement, Hain Celestial will pay £170m in cash and £30m in shares of its common stock.

The acquisition will include brands such as Hartley’s jams and marmalades, Sun-Pat peanut butter, Gale’s honey, Robertson’s jams and marmalades, and Frank Cooper’s jams, and these brands together generated over $250m in sales in fiscal 2011.

The deal will also include Premier Foods’ manufacturing base in Cambridgeshire.

Hain Celestial founder, president and CEO Irwin D Simon said the acquisition will enable the company to expand in the UK, while simultaenously positioning it among the leading food companies in the country.

The US company expects to grow its customer base with the acquired brands, which will complement its existing brands such as Rice Dream, Celestial Seasonings, Earth’s Best, Terra Chips and Sensible Portions in the UK.

The transaction, which is subject to approval by Premier Foods’ shareholders and clearance from its banking syndicate, is likely to be completed by the end of October 2012 and is expected to add about $0.25 per share to Hain’s earnings in fiscal 2013.

Following the acquisition, Hain Celestial will combine the acquired grocery brands to form a new Ambient Grocery Division.

Hain Celestial expects the new division to supply products to leading food retailers, food service, business-to-business and export companies in the UK.

Premier Foods has been struggling with a debt of £1.3bn, which was built up through acquisitions of several brands including Homepride and Fray Bentos.

To lower its debt, the UK company announced in October 2011 that it would focus on eight ‘power brands’ that comprise Hovis, Mr Kipling, Ambrosia, Sharwoods, Oxo, Loyd Grossman, Bisto and Batchelors, and divest select businesses.

The latest deal would represent Premier Foods’ third divestment in 2012.

In March 2012, the company renegotiated its bank debt, and received an extension for its repayment deadline from 2013 to 2016.

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Image: Premier Foods is selling its packaged grocery brands to focus on eight power brands and lower its debt of £1.3bn. Photo: Premier Foods.