Premier Foods has signed a deal to sell its Elephant Atta ethnic flour business to Associated British Foods (ABF) for a cash consideration of £34m.
The firm announced the news this morning and said the move to sell its ethnic flour business to ABF’s Westmill Foods subsidiary would include the Elephant Atta, Elephant Chakki Gold and Fassal brands, predominantly manufactured and packed at the firm’s Southampton-based mill.
Michael Clarke, chief executive officer, Premier Foods, said: "We are continuing to deliver on our growth strategies, growing our power brands, divesting selected, non-core businesses and reducing costs on track with our plans. The Elephant Atta brands are great brands that I’m sure will benefit from being part of Westmill Foods."
Premier Foods said it had entered into a co-packing agreement with ABF to which the firm will continue to manufacture the Elephant Atta brands, as well as entering into “transitional services arrangements to facilitate the smooth transfer of the business”.
George Weston, chief executive of ABF, said: “Elephant Atta is the UK’s leading ethnic flour brand and will complement Westmill’s other leading ethnic brands including Tolly Boy rice, Rajah spices, Lucky Boat noodles and Patak’s pastes and sauces.”
One employee has been transferred to Westmill Foods as part of the move, which was made on a cash- and debt-free basis, and proceeds of the sale will be used to pay down debt.
The Elephant Atta business reported revenues of £17.8m and an EBITDA of £6.4m for the year ending 31 December 2011.
Gross assets of the Elephant Atta business as of the end of December 2011 were £3m.