Premier Foods join forces with Gores Group to run Hovis
By Laurence Gibbons
- Last updated on
Premier Foods launched an £87.5M partnership with the US-based Gores Group to run its Hovis bread and flour business.
The partnership is expected to generate a short-term cash inflow to Premier Foods of about £28M, which will be invested into its grocery business.
The debt-laden food manufacturer will retain a 49% stake in the business. It will operate as a stand-alone joint venture and will trade under the name of Hovis Limited.
Gavin Darby, ceo of Premier Foods, said the deal would allow the firm to focus its attention on developing its category leading grocery brands.
“A joint venture arrangement also means we will share in the future gains from this investment as the business continues its return to profitable growth, helping us maximise value creation,” Darby added. “Both parties are excited by the opportunities this transaction brings.”
Fernando Goni, md at The Gores Group, said: “We believe there is significant untapped potential in such a well-loved, household name and are confident in the abilities of the talented management team to drive value for all stakeholders.
However, the deal was met with a mixed reaction by leading City analysts.