Premier Foods confirms approaches for Quorn business

HEAVILY indebted Premier Foods yesterday confirmed it has received approaches for its meat-free Quorn business, but insisted it will not be a firesale.

Britain’s biggest food producer is in a hurry to cut its debt pile and reports yesterday claimed it has been sounding out potential bidders for Quorn in a move that could raise about 200 to 250m.

Premier employs 320 staff at Quorn in Stokesley, North Yorkshire, plus another 60 at Billingham in Stockton-on-Tees.

The St Albans-based group, which is behind a host of household names including Hovis bread and Branston pickle, has been under increasing pressure to reduce its net debt of 1.4bn, which dwarfs its stock market value of 389m.

Reports claimed food groups Nestle, Unilever, Danone and Campbell’s could all be potential bidders for Quorn.

Premier said in a statement: “As stated at the time of its interim results on August 4, the board remains open minded about disposals, provided they deliver shareholder value and accelerate the reduction of average net debt/EBITDA (earnings before interest, tax, depreciation and amortisation).

“As part of this, the group confirms it has received approaches that may or may not lead to a sale of its meat free business, including Quorn. There can be no guarantee that such a transaction will take place.”

Premier Foods declined to name the suitors or how much it hopes to achieve from a sale.

It received an approach for the Mr Kipling cake business last year and there is speculation its Hovis bread brand could go up for sale.

News of a potential sale coincides with new chairman Ronnie Bell beginning his role today.

Mr Bell, who had been a non-executive director at Northern Foods since 2005, resigned from the Leeds-based group to take up the role at Premier.

The group’s borrowings have ballooned after an acquisition spree in recent years, buying Hovis bakery company RHM in 2007 and the UK arm of Campbell’s Soup in 2006 for about 450m.

The group started struggling under debts during the credit crunch in 2008 and was forced to complete a 400m share placing to raise cash early last year.

Quorn was bought by Premier in 2005 when it acquired Marlow Foods for 172m.

The first Quorn product was launched in 1985 using a specially developed protein-based ingredient called mycoprotein, and it has since become a popular meat substitute for vegetarians.