Premier Foods sells Quorn business to private equity

24th Jan 2011 09:48

Premier Foods has sold its vegetarian foods business to a private equity consortium for £205m as it seeks to reduce its debt burden.Premier, whose most famous brands include Hovis bread and Sharwood's cooking sauces, sold the division to Exponent Private Equity, whose current portfolio includes the bed retailer Dreams and the rail ticket website thetrainline.com. The £205m price tag is less than the £230m some had reported as Premier's asking price for the division, whose products include those sold under the Quorn brands. The division is expected to report sales of £128.8m for the year to December 31.Premier said the sale will reduce its average debt to EBITDA ratios by about 0.35 times and "represents a large step in the group's financial strategy to reduce debt, which in turn will facilitate the diversification of financing sources."Premier last year set a target of reducing its average debt to EBITDA ratios to 3.25 or less and to diversify its funding sources. Selling the meat-free business will also help Premier to focus more resources and management time on the Grocery and Hovis businesses and brands."This deal represents another step along the road to achieving a capital structure which we believe will be more attractive to investors," said Premier chief executive Robert Schofield. "It will also enable the business to focus further on building our current portfolio of great British brands."Shares in Premier rose sharply this morning, adding to gains that came on Friday amid speculation that Swiss food giant Nestle was a potential buyer, but the gains were pared after Premier made its announcement later in the morning.