Premier mulls Hovis investment plan

The group, whose other brands include Mr Kipling and Bisto, has appointed Ondra Partners to assist in developing options for the business, which could include co-investment by a partner.

According to Sky News, Premier could spin out the bread business into an entirely separate company which would be jointly owned by Premier Foods and a new investor.

St Albans-based Premier said today: “There can be no certainty that a transaction will follow at any point in the future, but the company will provide updates as appropriate.”

An outright sale of the bread arm is not thought to be under review, having been considered by a previous management team last year.

Premier, which has debts of £890m following a spending spree which included the owner of Mr Kipling, has sold a number of businesses, including Sarson’s vinegar and Haywards pickles.

It has been overhauling its bread division, recently announcing the closure of three bakeries in Eastleigh, Greenford in west London and Birmingham, while also shutting distribution centres in Greenford, Birmingham, Mendlesham and Plymouth with the loss of 900 jobs.

Bread sales reduced by 0.7 per cent to £240.6m in the half-year to June 30 while the Hovis-branded division has lost £75m in annual sales after opting not to renew a low-margin contract with the Co-op.

Rank Hovis, which traces its roots back to 1875, when Joseph Rank saw the potential of grinding wheat with steel rollers in preference to millstones, was bought by Premier Foods in 2007.

Hovis was the first to advertise on British television in 1956 and went on to launch one of the most famous TV ads of all time in 1973 with the ‘Boy on the bike’ directed by Ridley Scott and featuring the music from Dvorak Symphony No.9.