Broker snap: Investec pleased with Premier Foods' Irish brand disposal

16th Dec 2011 09:54

Investec has kept its buy rating on FTSE 250 foods group Premier Foods following last night's announcement that it will dispose of its four Irish Brands.The firm, famous for the Hovis and Mr Kipling brands, announced at 18:30 on Thursday evening that it had signed an agreement to offload its four Irish Brands - Chivers, Gateaux, McDonnells and the Erin licence - for €41.4m to The Boyne Valley Group."Another week, another disposal at fast-changing Premier Foods," writes Investec analyst Martin Deboo."While the disposal of the Irish brands is neither as lucrative nor as pivotal as last week's exit from Brookes Avana, it still represents a further cash realisation and tidying-up exercise," he said.The broker notes that while the sale may be 5% dilutive to earnings per share in 2012, "what really matters it the impact on the balance sheet and the group's degree of focus".Investec says its remains happy with its buy case, 15p target price and "the pace of progress being made".Shares were up 3.1% at 5.9p by 09:53 on Friday morning.BC