Premier Foods sells sweet pickles and table sauces business to Mizkan

UK-based Premier Foods has completed the sale of its sweet pickles and table sauces business to Japanese food firm Mizkan for £92.5m in cash.

The deal is part of Premier Foods’ strategy to focus on driving further momentum in its grocery business, unlock value in the bread segment and pay its debt.

The sale includes the production, distribution, sales, marketing and licensing of Branston branded sweet pickle, ketchup, relish, salad cream and mayonnaise, as well as Premier Foods’ Bury St Edmunds factory in Suffolk, UK.

On 30 October 2012, Premier Foods entered into the agreement with Mizkan to sell its sweet pickles and table sauces business.

With the completion of the deal, Premier Foods has gained £370m through divestments since March 2012, higher than the £330m target it planned to reach by June 2014, as part of its new financing arrangements.

This represents a 30% reduction in the company’s debt since 30 June 2012, when it reported a net debt of £1.26bn.

Both firms have also entered into a co-packing agreement under which Mizkan will continue to manufacture certain cooking sauces and other products at the Bury St Edmunds facility for the next 15 years.

Premier Foods has been struggling to pay off its debt, which was built up through acquisitions of several brands including Homepride and Fray Bentos.

In early October 2011, the British food company announced that it will focus on investing in its eight ‘power brands’ – Hovis, Mr Kipling, Ambrosia, Sharwoods, Oxo, Loyd Grossman, Bisto and Batchelors – and divest select businesses.

In March 2012, it renegotiated its bank debt, and received an extension of its repayment deadline from 2013 to 2016.

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Image: With the sale of its sweet pickles and table sauces business, which includes Branston branded sweet pickle, Premier Foods has gained £370m through divestments since March 2012. Photo courtesy of Premier Foods.