Premier Foods, the UK's largest food producer behind brands such as Hovis bread, Bisto gravy and Ambrosia custard and rice pudding, has completed the disposal of its Sweet Spreads and Jellies Business to US peer Hain Celestial.
Hain Celestial, which prides itself for its 'natural food' brands such as Linda McCartney and DeliGo, will now take over Histon Sweet Spreads Limited (the owners of the Sweet Spreads and Jellies Business) and will see Hartley's jam, Sun-Pat peanut butter and Gale honey join its portfolio.
The divisions were sold for a cash payment of £170m, while Premier Foods will also receive shares in the American company worth at least £30m (at completion) to make an aggregate consideration of £200m on a cash and debt-free basis.
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Premier Foods' shareholders celebrated the news on Monday afternoon, with shares in the debt-laden firm up nearly 12% at 102.25p. Even including the rise, the stock is still nearly 40% down over the last six months.
When the divestment agreement was first announced back in August, Chief Executive Officer Michael Clarke said that it is a "major step forward in our strategy to simplify the business and focus on our Power Brands" - these include Hovis, Bisto and Ambrosia, as well as Mr. Kipling cakes, OXO stocks and Sharwood's sauces and Asian foods.
Clarke said: "Following completion of this sale, we will have raised around £275m of the £330m disposal proceeds that we committed to achieving by June 2014. This will represent a 22% reduction in our net debt since the half year."
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