Tags: Hain | Celestial | Premier | Foods

Hain Celestial to Buy Premier Foods to Lift UK Presence

Thursday, 23 August 2012 01:46 PM

U.S. food maker Hain Celestial Group Inc agreed to buy the jam and spreads business of Britain's Premier Foods Plc for 200 million pounds ($316 million) to expand its presence in that market.

The deal gives Hain Celestial, home to Celestial Seasonings tea, Earth's Best baby food and Terra Chips, greater scale in Britain, where it hopes to replicate the success it has experienced in the United States.

Hain also reported better-than-expected fourth-quarter earnings late on Wednesday and gave an upbeat forecast for the new fiscal year, proving that its portfolio of natural and organic products is outperforming other packaged food peers.

Hain shares jumped 19 percent on Thursday to their highest level ever. The were the second-biggest gainer on the Nasdaq stock market, logging their biggest percentage jump since 2003.

Shares of Premier Foods, which owns British brands including Hovis bread, Batchelors quick meals, Mr. Kipling cakes and Loyd Grossman cooking sauces, closed 1.5 percent higher in London.

Premier has been selling businesses to focus on eight key brands to try to turn around its business. The latest deal, which includes Hartley's jams and Sun-Pat peanut butter, follows the sales of flour brand Elephant Atta and Sarson's vinegar earlier this year.

"This was a deal they needed to do because this is probably their most valuable asset of those they can credibly dispose of," said Investec Bank analyst Martin Deboo.

Premier's net debt was 1.3 billion pounds at the end of June. It aims to raise 330 million pounds in disposal proceeds by June 2014.



The transaction is expected to add 25 cents to Hain's earnings per share in fiscal 2013. It will consist of 170 million pounds in cash and 30 million pounds in Hain Celestial shares.

"While the brands purchased are more iconic, rather than natural and organic, the strategy of acquiring an established platform with scale to then drive further penetration of existing Hain brands makes, in our opinion, tremendous sense," Jefferies' analyst Scott Mushkin said in a note to clients.

Hain Celestial's net sales from its UK business grew nearly four-fold to $192.4 million for the year ended June 30.

Premier Foods shares rose 1.5 percent to close at 67.25 pence on the London Stock Exchange. Hain Celestial's stock was up 18.6 percent at $67.50 on Thursday afternoon on the Nasdaq.

Rothschild advised Hain on the deal.

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Thursday, 23 August 2012 01:46 PM
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