Premier Foods spins out Hartley's to Hain Celestial

Amy King
23 August 2012

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British food producer Premier Foods, backed by Warburg Pincus, has sold its jams and spread business Hartleyтs to US food manufacturer Hain Celestial for ТЃ200m.

Hain Celestial has committed £170m in cash and £30m in shares for the company.

Proceeds from the sale will be directed towards the reduction of Premier Foods' debt, which stood at £1.3bn at the end of June. The sale is in line with Premier Foods' strategy of divesting its non-core businesses.

Private equity firms including TDR Capital, CapVest and Morgan Stanley Private Equity also expressed interest in acquiring the firm, but were reported to have been deterred by an additional stage after preliminary bids of £160-180m were thought to be too low.

The Hain Celestial sale includes a portfolio of marmalade brands in Robertson's, Frank Cooper, Keiller and the licence for Rose's marmalade as well as peanut butter brand Sun-Pat and honey manufacturer Gales. The group's Histon factory, near Cambridge, is also included in the sale, which is in line with Hain's desire to expand further into UK markets.

Previous funding
In 1999, Hicks Muse Tate & Furst (HMTF) backed the buyout of Premier Foods with an offer of 147 pence per share. HMTF was understood to have provided an equity investment amounting to around £171m.

In 2002, HMTF provided further capital to Premier Foods. A year later, the investor provided capital to support the acquisition of Ambrosia and Brown & Polson from Unilever, in a deal reported to be worth around €105m.

In 2004, HMTF floated Premier Foods. At an offer price of 215 pence per share, the business had a market capitalisation of around £527m. HMTF sold shares worth £232m.

In 2009, Warburg Pincus committed £64m to Premier Foods in exchange for a 10.3% stake in the business. The deal was part of a £404m capital raising for the listed firm. Later that year, Warburg Pincus increased its stake in Premier Foods to 17.7%.

Company
UK-based Hartley's produces sweet spreads and jellies. Premier Food reported sales of £165m for the sweet spreads and jellies business for 2011, with trading profit of £36.1m.

People
Michael Clarke is CEO of Premier Foods. Irwin Simon is founder, president and CEO of Hain Celestial.

Advisers
Vendor (Premier Foods) – Spayne Lindsay & Co (Corporate finance).
Acquirer – Rothschild (Corporate finance).