Premier Foods has refused to comment on rumours that it is close to selling its own-label chilled foods and cake business RF Brookes and Avana Bakeries to a major industry rival.
A source told FoodManufacture.co.uk that Northern Foods/2 Sisters Food Group and Greencore had held recent meetings with Premier Foods to discuss a potential purchase of Brookes Avana, although both potential suitors declined to comment.
RF Brookes makes chilled ready meals for Marks & Spencer (M&S) at Rogerstone, Gwent, and pies, pizzas and other savouries for the retailer at Wigston, Leicester.
Avana Bakeries makes own-label large celebration cakes, Christmas puddings and chilled desserts from a site in Newport.
The source said that Greencore and Northern were asked to confirm bids by the middle of this week, prior to Premier’s half-year trading statement yesterday (which City analysts described as “shocking” ), and added that both had visited factories and met “senior people”.
Financial information website London South East has also carried rumours that Premier’s group operations director, Bob Spooner, recently showed an interested party around one Brookes Avana facility.
However, earlier this month Premier revealed that RF Brookes had lost a pie contract with major customer M&S – and announced yesterday that this had hit year-on-year profits by £10m – which City analysts believe will depress the potential sale value of the business.
High on disposal list
Industry sources said that since 2 Sisters Food Group owner Ranjit Boparan had only bought Northern in April, and was busy integrating the two businesses, he was therefore unlikely to be interested in Brookes Avana.
Dr Clive Black from Shore Capital told FoodManufacture.co.uk: “We think all of Premier is for sale at an acceptable price that covers liabilities.
“Brookes has been high on the disposal list for some time, and so we’re not surprised about potential suitors being evident at present, although we’d be surprised by Northern Foods acquiring at this juncture, with the indebtedness assumed by Boparan Holdings to acquire it.
“The Brookes Avana price is coming down by the month with business losses and don’t forget there are quite a few businesses to look at.”
Martin Deboo from Investec said:“I think it would be sensible to look at disposals on the right terms. It’s the last remaining non-core business, and it makes sense for Premier to deleverage generally. But it depends on there being willing buyers.”