TIDMPFD TIDMIRSH
RNS Number : 5262T
Premier Foods plc
25 July 2022
25 July 2022
Premier Foods plc (the "Company" or the "Group")
Acquisition of The Spice Tailor, accelerating branded growth strategy
Premier Foods today announces it has agreed to acquire The Spice
Tailor ("The Spice Tailor"), a premium, authentic Indian and South
East Asian meal kits and accompaniments brand.
Strategic highlights
======================
-- A high growth premium brand with +20% compound annual growth
rate(1) over the last four years and forecast to deliver strong
sales and profit growth over the coming years
-- Closely aligned to current consumer trends including
convenient home cooking, premiumisation and authenticity
-- Highly complementary to the Group's Sharwood's and Loyd Grossman brands
-- Strong geographical fit with Premier Foods' existing
footprint, with a presence in the UK, Australian, Canadian and
Irish markets
-- Will significantly expand the Group's ethnic foods business in Australia
-- Delivery of further growth through leveraging Premier Foods'
well established and proven branded growth model
-- The Group's strong retailer partnerships present a clear
opportunity to expand current retailer distribution across existing
and new geographies
Alex Whitehouse, Chief Executive Officer
"We have greatly admired The Spice Tailor business for some time
and we're very much looking forward to it joining our existing
stable of strong brands. The acquisition is well aligned to our
growth strategy and we see a clear opportunity to build on the
excellent track record of The Spice Tailor, by leveraging the
elements of our proven branded growth model. This acquisition
represents a highly complementary geographical fit, and we see
significant potential to expand The Spice Tailor's distribution in
all our target markets. We see this as another important milestone
for us following the Group's strong performance over recent years
and The Spice Tailor is an important addition to accelerate our
future growth plans."
Adarsh and Anjum Sethia, Founders, The Spice Tailor
"We're very pleased that The Spice Tailor will become part of
Premier Foods and are looking forward to unlocking further growth
for the brand which we have nurtured since its inception. We see
Premier with their track record of brand investment and strong
commercial relationships, as the perfect fit for The Spice Tailor,
driving it onto the next stage of its evolution."
Transaction details
====================
-- Premier Foods will acquire 100% of The Spice Tailor shares(2)
for initial consideration of GBP43.8m on a cash free and debt free
basis
-- Additional consideration is dependent on future performance,
earn out structure over a three year period from FY23/24, subject
to further growth targets(3)
-- Earnings accretive(4) in year one and funded through a
combination of cash and available committed facilities
-- The Spice Tailor is expected to generate revenue of GBP17.3m in FY22/23
-- Completion is subject to merger control clearance
-- On a pro forma basis, if this transaction completed during
the financial year ended 2 April 2022, Net debt/EBITDA would have
been flat to the prior year; the Group's net debt/EBITDA target of
1.5x is unchanged
Further background
===================
The Spice Tailor is particularly popular with consumers who
enjoy scratch cooking and appreciate the strong authentic taste
profiles the products deliver, typically attracting different
consumers than users of Sharwood's and Loyd Grossman . Once
integrated into the Group's Cooking Sauces and Accompaniments
category team, The Spice Tailor will benefit from increased levels
of marketing investment to drive product awareness and household
penetration, additional new product development resources, and
access to Premier Foods' commercial capabilities and strong
retailer relationships. The Spice Tailor's largest markets are the
UK and Australia which account for 58% and 35% respectively of
annual FY21 sales.
Operating an asset light business model, the authenticity of The
Spice Tailor range is reflected in the fact that the vast majority
of its products are manufactured in India, by way of outsourcing to
BRC accredited suppliers.
Further information on the transaction can be found in an
investor presentation on our website at
https://www.premierfoods.co.uk/Investors/Results-Centre/2022-2023.aspx
Ends
About Premier Foods
As one of the UK's largest food businesses, we're passionate
about food and believe each and every day we have the opportunity
to enrich life for everyone. Premier Foods employs over 4,000
people operating from 15 sites across the country, supplying a
range of retail, wholesale, foodservice and other customers with
our iconic brands which feature in millions of homes every day.
Through some of the nation's best-loved brands, including
Ambrosia, Batchelors, Bisto , Loyd Grossman, Mr. Kipling, Oxo and
Sharwood's, we're creating great tasting products that contribute
to healthy and balanced diets, while committing to nurturing our
people and our local communities, and going further in the pursuit
of a healthier planet , in line with our Purpose of 'Enriching Life
Through Food'.
Contacts:
Institutional investors and analysts:
Duncan Leggett, Chief Financial Officer
Richard Godden, Director of Investor Relations
Investor.relations@prem ier foods.co.uk
Media enquiries:
Lisa Kavanagh, Director of Communications
Headland
Ed Young +44 (0) 7884 666830
Jack Gault +44 (0) 7799 089357
- Ends -
This announcement may contain "forward-looking statements" that
are based on estimates and assumptions and are subject to risks and
uncertainties. Forward-looking statements are all statements other
than statements of historical fact or statements in the present
tense, and can be identified by words such as "targets", "aims",
"aspires", "assumes", "believes", "estimates", "anticipates",
"expects", "intends", "hopes", "may", "would", "should", "could",
"will", "plans", "predicts" and "potential", as well as the
negatives of these terms and other words of similar meaning. Any
forward-looking statements in this announcement are made based upon
Premier Foods' estimates, expectations and beliefs concerning
future events affecting the Group and subject to a number of known
and unknown risks and uncertainties. Such forward-looking
statements are based on numerous assumptions regarding the Premier
Foods Group's present and future business strategies and the
environment in which it will operate, which may prove not to be
accurate. Premier Foods cautions that these forward-looking
statements are not guarantees and that actual results could differ
materially from those expressed or implied in these forward-looking
statements. Undue reliance should, therefore, not be placed on such
forward-looking statements. Any forward-looking statements
contained in this announcement apply only as at the date of this
announcement and are not intended to give any assurance as to
future results. Premier Foods will update this announcement as
required by applicable law, including the Prospectus Rules, the
Listing Rules, the Disclosure and Transparency Rules, London Stock
Exchange and any other applicable law or regulations, but otherwise
expressly disclaims any obligation or undertaking to update or
revise any forward-looking statement, whether as a result of new
information, future developments or otherwise.
Notes to editors:
1. Four-year average revenue growth rate, year ended 31 March 2018 to 31 March 2021.
2. The Group will acquire 100% of the shares of The Spice Tailor
Limited and its subsidiaries, The Spice Tailor Direct Limited, The
Spice Tailor (Canada) Limited and The Spice Tailor (Australia) Pty
Limited.
3. Additional consideration above the Enterprise value of
GBP43.8m is structured over a three-year timeframe from year ending
30 March 2024, dependent on future sales growth and subject to a
maximum cap of total consideration (comprising initial
consideration and additional consideration) of GBP72.5m.
4. For year ended 31 March 2021, The Spice Tailor reported
Profit before tax of GBP0.7m; as at 31 March 2021, Gross Assets
were GBP4.6m
5. Expected to be Adjusted earnings per share ("eps") accretive
in year one. Adjusted eps is defined as Adjusted profit after tax
divided by the weighted average number of shares in the period.
Adjusted profit after tax is defined as Adjusted profit before tax
less a notional charge of 19.0%. Adjusted profit before tax is
defined as Trading profit less net regular interest. Trading profit
is defined as profit/(loss) before tax, before net finance costs,
amortisation of acquired intangibles, fair value movements on
foreign exchange and other derivative contracts, net interest on
pensions and administration expenses. Net regular interest is
defined as net finance cost after excluding write-off of financing
costs, early redemption fees, other interest payable and other
finance income.
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END
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