UK-based Premier Foods has entered into an agreement to sell its sweet pickles and table sauces business to Japanese food firm Mizkan for £92.5m in cash.
The sale includes production, distribution, sales, marketing and licensing of the Branston branded sweet pickle, ketchup, relish, salad cream and mayonnaise, as well as Premier Foods' Bury St Edmunds factory in Suffolk, UK.
For the 12 months to 31 December 2011, the sweet pickles and table sauces business had sales of £66m, EBITDA of £11.7m, and trading profit of £8.5m.
Following the completion of the deal, the company would have gained £370m through divestments since March 2012, higher than the £330m mark it planned to reach by June 2014, in line with its new financing arrangements.
In addition, Premier Foods would have lowered approximately 30% of the net debt since June 30 2012, when the company reported a net debt of £1.26m.
Premier Foods chief executive officer Michael Clarke said the company has surpassed the disposal target 20 months early and has also reported three successive quarters of sales growth, while eliminating £40m of overhead costs out of the business.
"We can now focus our attention on driving further momentum in our Grocery business and unlocking value in Bread," Clarke added.
Mizkan chief executive officer Kazuhide Matazaemon Nakano VIII said that the Branston brand fits well with the company's global product range, and provides a strong foundation for growth in the UK.
The deal, which is subject to approval by Premier Foods' shareholders and consent from the banking syndicate, is likely to be completed in early 2013, following which, all the employees are expected to be transferred to Mizkan.
