Premier Foods completes sale of vinegar and sour pickles business

UK-based Premier Foods has completed the disposal of its vinegar and sour pickles business, which includes the Sarson’s and Dufrais vinegar brands and the Haywards pickles brand, to Japanese food firm Mizkan for an all-cash deal of £41m.

The sale includes the production, distribution, sales and marketing of the Sarson’s, Haywards and Dufrais brands, the associated private label business, a factory in Middleton, and the pickled beetroot and piccalilli lines at the company’s factory in Bury St Edmunds.

In June 2012 Premier Foods entered into an agreement to sell the business, as part of its plan to lower debts and avoid a breach of its credit agreement.

Premier Foods CEO Michael Clarke had then noted that the sale of these brands would enable the company to focus on supporting its ‘power brands’, while Mizkan CEO Kazuhide Matazaemon Nakano VIII said the brands fit well with the company’s global product range, and provide a solid foundation for growth in the UK.

The Sarson’s, Dufrais and Haywards brands are mostly manufactured at the company’s factory in Middleton, UK.

For the 12 months to 31 December 2011, the vinegar and sour pickles business had a turnover of £34m, an EBITDA of £6.2m, and gross assets of £31.7m.

Recently, the company divested its Elephant Atta ethnic flour business to Westmill Foods, a subsidiary of Associated British Foods (ABF), for £34m.

Premier Foods is struggling to pay off its debt of £1bn, which was built up through acquisitions of a number of brands including Homepride and Fray Bentos.

To lower its debt, Premier Foods 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.

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 has sold its vinegar and sour pickles business to focus on eight power brands and lower its debt of £1bn. Photo: Premier Foods.