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Premier Foods won't speculate on jam and pickle disposal rumours

By Jane Byrne , 10-Jan-2012

Related topics: Business

Premier Foods has refused to comment on media speculation that it is set to sell off its jam and pickles brands to reduce its debt burden.

Sources close to the deal, report Reuters, said that the UK food manufacturer is aiming to divest itself of its Hartley's jams and Hayward’s pickles businesses for over £200m (€242m). Premier Foods is trying to sell a range of assets to reduce its debt mountain.

The report claims that Premier has appointed two investment banks to sell the two brands.

But when contacted by FoodNavigator.com this morning, a spokesperson for the UK food company would not be drawn on whether there was anything behind the market rumours.

The stated strategy of Premier’s new CEO, Michael Clarke, is to focus the group on eight of its biggest brands while selling off other businesses to meet the upcoming covenant test from its banks.

December last year saw the UK food maker sell its four Irish brands, Chivers, Gateaux, McDonnells and the Erin licence to the Boyne Valley Group for £34.7m.

The late 2011 divesture followed Premier’s earlier disposal of chilled foods division Brookes Avana to the 2 Sisters group.

Shore Capital analyst, Darren Shirley, claims nothing can be ruled out in terms of Premier’s disposal plans, adding that Hartley’s is a good brand in what is not a high performing category. "It would provide a consolidation opportunity for another jam producer as it is still a profitable arena."

But he flagged up analysts’ worries about the UK group’s “ever-decreasing circle”.

Shirley added: “All Premier brands are potentially for sale but we remain concerned about the group’s capacity to generate enough cash flow if it continues to shrink.”

Julian Wild, food group director at UK law firm, Rollits, agrees, and while he rates the new management team at Premier, he told this publication back in December: “Premier is desperate for cash. But the question is how, following these divestments, is the team going to be able to take the profits forward?”

“Jams and pickles are as good an asset for disposal as any other,” said another industry insider who wished to remain anonymous. He told this publication that private equity would be the most likely buyer of Hartley’s or the Hayward’s ranges.

“The major food companies wouldn't be interested and the midcaps don't have the balance sheet,” said the UK food sector analyst.