has struck a deal to bring in private equity company the Gores Group in a bid to help reinvigorate its struggling bread division.The US firm has paid £30 million for a 51% stake in the British bread unit, which will now be run as a joint venture called Hovis Limited.
The two companies will jointly invest £45 million to "reinvigorate the Hovis brand, building on its strong heritage".
Premier said the new set-up would mean a increase in investment in the bread business, both to improve operational efficiency, while enabling Premier to focus its attention and resources on its grocey brands, such as Mr Kipling, OXO, Bisto and Batchelors.
“Premier Foods considers a joint venture to be the best way to maximise value in the bread business through securing new investment and retaining the opportunity to share in the expected future gains from this investment as the business continues its return to profitable growth,” the company said.
“The transaction will additionally enable the company to strengthen its position in the ambient Grocery market through focusing its full attention and resources on continuing to grow its category leading Grocery brands.”
Premier said the transaction represented an overall value for the bread business of £87.5 million, including £28.7 million of working capital that will be retained by Premier Foods. However, Premier and Gores have agreed to invest a combined £45 million in the business in proportion to their respective holding in the form of loan notes.
