UK-based Premier Foods has sold Elephant Atta ethnic flour business to Westmill Foods,a subsidiary of Associated British Foods(ABF),in an all-cash deal of £34m,as a part of its plan to lower debts and avoid a breach of its credit agreement.
The deal also includes the sale of smaller ethnic flour brands-Elephant Chakki Gold and Fassal.
Elephant Atta,which is a leading ethnic flour brand in the UK,is sold in a variety of medium,self-raising,white,brown and wholemeal flours,and is used to produce chapatti and other unleavened flat bread.
For the 12 months to 31 December 2011,the Elephant Atta flour business had a turnover of £17.8m and an EBITDA of £6.4m,and gross assets of £3m.
Premier Foods CEO Michael Clarke said that the company is continuing to achieve growth by focusing on power brands,divesting non-core businesses,and reducing costs.
ABF chief executive George Weston said that Elephant Atta will complement Westmill's other leading ethnic brands including Tolly Boy rice,Rajah spices,Lucky Boat noodles and Patak's pastes and sauces.
Until regulatory approval is obtained,Premier Foods will continue to mill and package the flour brands at its milling facility in Southampton.
The company is struggling to pay off its debt of £1bn,which was built up through the acquisition of a number of brands including Homepride and Fray Bentos.To lower its debt,Premier Foods announced last year that it would focus on eight'power brands'Hovis,Mr Kipling,Ambrosia,Sharwoods,Oxo,Loyd Grossman,Bisto and Batchelors,and divest select businesses.
