The Sherwood's and Loyd Grossman owner will acquire 100% of The Spice Tailor’s shares on a cash-free and debt-free basis, subject to merger and control clearance.
Premier said the deal had a geographical fit with its existing footprint, with a presence in the UK, Australian, Canadian and Irish markets. The acquisition would also significantly expand its ethnic foods business in Australia.
Commenting on the acquisition, Premier Foods chief executive Alex Whitehouse said: “The acquisition is well aligned to our growth strategy and we see a clear opportunity to build on the excellent track record of The Spice Tailor, by leveraging the elements of our proven branded growth model.
“This acquisition represents a highly complementary geographical fit, and we see significant potential to expand The Spice Tailor's distribution in all our target markets. We see this as another important milestone for us following the Group's strong performance over recent years and The Spice Tailor is an important addition to accelerate our future growth plans.”
Once integrated into the Group's Cooking Sauces and Accompaniments category team, The Spice Tailor will benefit from increased levels of marketing investment to drive product awareness and household penetration, additional new product development resources, and access to Premier Foods' commercial capabilities and strong retailer relationships.
The Spice Tailor's largest markets are the UK and Australia which account for 58% and 35% respectively of annual FY21 sales.
Shore Capital equity research analyst Darren Shirley said the deal was about driving revenue expansion for Premier through its pre-existing operating platform and was, in that respect, highly complementary.
“We warmly welcome the deal, which augments Premier’s strength in the category and complements internationalisation, hand-in-glove stuff,” said Shirley. “If this sets the tone for future such activity, then bright days are ahead and the equity rating should expand.”
Meanwhile, Marks & Spencer has purchased its own logistics company as part its plans to accelerate its food supply chain transformation.